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Coping With Financial Setbacks

Coping With Financial Setbacks

Sep 2021

It’s not always a smooth ride when it comes to managing personal finances. Bumps in the road can derail your plans if you don’t take steps to protect yourself and stay on top of the situation. Here are some strategies that can help.

Financial Challenges

There are a number of difficulties you can face on the journey through life. Some events that can negatively impact your personal finances include:

     Layoff or furlough

     Illness or disability

     Lawsuits

     Divorce

     Death of a spouse

     Investment losses

     Fire or theft

     Pay cut or reduced hours

     Major repairs (including home or auto)

Plan, Prepare and Protect Yourself

You can prepare financially for most of these situations. Combining approaches to create multiple layers of protection is even better.

     Insurance. A good home or auto insurance policy can help lower expenses related to an insured event such as a theft, fire or accident. Health and disability insurance can cover some costs related to illness or injury. And life insurance can assist your family in the event the unthinkable occurs.

     Umbrella policy. If you’re worried about major accidents and lawsuits that target your assets, an umbrella policy can protect you in a way that a regular insurance policy might not. An umbrella policy’s coverage generally picks up where home and auto policies leave off.

     Emergency fund. Set aside money in an emergency fund to cover expenses without having to rely on credit cards. This dedicated account can also help you withstand investment losses as you wait for a recovery or adjust your strategy.

     Maintain good credit.  Should you need a loan to help with certain setbacks, having good credit can go a long way toward ensuring access to lower rates and more affordable terms.

With the right planning in place, you have a better chance of weathering financial storms. Take action before you’re in the middle of a crisis if at all possible.

Additional Tips for Managing Financial Setbacks

     Don’t panic. Take a moment to stop and breathe. It can be difficult to make decisions at this time, but it will be harder to think clearly if you’re panicked.

     Look for community and state resources. If you can access a food pantry, apply for unemployment benefits or connect with other programs, it can free up necessary cash to deal with a crisis. Remember that these services are meant for times of distress. Consider returning the favor for others when you get through this setback.

     Take care of yourself. Do your best to eat healthy, get adequate sleep and exercise. You’ll make better decisions and have greater resiliency when you practice self-care.

     Do some research. There’s a plethora of articles and advice online, but seek out only reputable sources of financial information not chat rooms or social media.

     Seek social support. Get emotional support from friends and family who won’t judge you. Find people who can serve as a sounding board as you work through financial challenges.

The Bottom Line

Seek information and advice from reliable sources as you navigate financial setbacks. Your WellCents financial professional can be a value resource to help you plan and pivot to adjust your financial strategy to help weather whatever storm blows through.

Summer Fun on a Budget

Summer Fun on a Budget

Aug 2021

Planning for the future is important, but so is enjoying the present. Luckily, there are many fun summer activities that don’t have to break the bank. Here are some tips to have a blast on a budget as the thermometer heats up.

 

Dining. Whether you enjoy freshly caught fish at an Italian trattoria or boardwalk funnel cake, waterfront restaurants are inherently appealing. But sometimes all you really need is a great view. Save money on your next trip to the beach or lake by packing a picnic meal. Bringing your own food adds a simple charm to your day, and you’ll often find that purchasing tasty treats from the grocery store saves money and leaves you with great leftovers for your next summer adventure.

 

Travel. Road trips are synonymous with summer travel value for good reason. Airline or cruise travel often leaves you with additional costs beyond the ticket price, such as rental cars or Wi-Fi. In contrast, a road trip lets you better control your budget by bringing more snacks, minimizing surcharges, and picking cheaper lodging through Airbnb or a discount hotel chain. If possible, plan your summer trips well away from major holidays or conventions to avoid price spikes.

 

Entertainment. You don’t have to leave town to see something new. Check out your city’s social media pages or good old fashioned bulletin boards for upcoming events. Even if crowded fireworks celebrations aren’t your thing, you’ll often find art shows and antique festivals that bring interesting wares — and unique food — to a cultural district near you. In addition, many libraries and parks host free movie screenings that let you experience a familiar classic at a pleasant venue.

 

Nature. Many people choose the place they live just for easy access to a beach or an unspoiled forest. But city folk need not despair. Use Google Maps to search for city or national parks in your area. Some may be close enough to justify a day trip. Others may be just a turn away from the main road but conceal the bustle in ways that feel like you’ve entered another world.

 

Activities. Learning about your parks will also show you great places to go for tennis, basketball, baseball and other sports. Certain parks may specialize in specific activities, while others go all-in on a massive multi-sports complex. Flow down the river in a kayak at a state or national park or take your kids to a public pool with slides and fountains that feel like a mini water park! There are also your local YMCAs, athletic clubs, and rec centers for air-conditioned fun, which could include slower-paced games like billiards and shuffleboard for family and friends of all ages. Checking social media may help you find amateur leagues or informal groups that connect you to other enthusiasts.

 

Staycation. Don’t assume you know your area inside and out. Even small towns have museums and cultural centers you may be unaware of — or offer new exhibits that reveal unknown parts of its history. Unorthodox attractions like ghost tours or escape rooms can be a fun diversion for date nights. If you enjoy camping, pack up some gear for an overnight trip or set up a tent in the backyard.

 

Don’t head into Labor Day with a huge credit card bill over your head. Keeping your summer activities budget-friendly will help rein in expenses so you can keep the fun going all year long.

 

 

10 Steps to Making a Budget

10 Steps to Making a Budget

Apr 2021

Creating — and sticking to — a household budget is the cornerstone of a sound personal financial plan. Here’s how to make one in 10 simple steps.

 

1. Pick a system. There’s no shortage of budgeting apps and online tools available. You can also use a basic electronic spreadsheet or even pen and paper, if you prefer. But whatever your approach, select a convenient and flexible system to capture and categorize your income and expenses over time.

 

2. Track current spending. Keep track of everything you buy for a month to have a realistic picture of your spending before you start. It can be surprising how many purchases occur under your radar — like that occasional latte, magazine or fast-food lunch.

 

3. Log Your Income. Record income from your job and any other sources, like a side hustle building websites or selling handmade jewelry on Etsy. Don’t forget to include investment or retirement income as well.

 

4. Record Fixed Expenses. These are costs that remain relatively stable over time — things like your mortgage, insurance premiums or car payment.

 

5. Project Variable Expenses. These change from month to month. They might include things like gas, takeout dinners and clothing purchases. Credit card payments tend to also fall into this category. Look at your average over the two previous months for a ballpark, but always err on the high side when it comes to budgeting for them.

 

6. Include Occasional Expenses. Some expenses only come up from time to time. They can be predictable (like your summer vacation) or unpredictable (like a car repair). Either way, it’s important to budget for expected and unexpected occasional expenses. To do this, take the total estimated cost, divide by 12, and include that amount into your monthly budget.

 

7. Emergency Fund Savings. Aim to set aside at least 3-6 months’ worth of expenses in a highly-liquid savings vehicle like an FDIC-insured bank account (some advisors suggest 12 months depending on whether you own a home, are married or have children). Clearly, this can take time to build up, so if you don’t yet have enough saved for a rainy day, budget regular contributions to an emergency fund.

 

8. Retirement Savings. Sit down with your financial advisor, who can help you determine how much you’ll need to save in your 401(k) and other retirement accounts each month to stay on track to achieve your retirement goals. It’s important to “pay yourself first” when it comes to funding your future — and your budget should reflect this important priority.

 

9. Plan for Windfalls. Decide ahead of time what you’ll do with an increase in pay, tax refund, gift, bonus or other found money. Having a plan reduces the likelihood of an impulse buy. Consider using most of it to bolster your retirement fund or pay down debt.

 

10. Monitor and Periodically Re-evaluate. It’s important to reexamine your budget regularly and whenever your financial circumstances change. Depending on your situation, that could be quarterly, semi-annually or annually.

 

Don’t be hard on yourself if it’s difficult to stick to your budget each and every month. You may need to make some adjustments from time to time. The most important thing is to keep trying to meet your spending and saving targets. If you need help determining a realistic budget for your situation, make an appointment with a financial advisor who can assist you.

 

Budgeting During a Pandemic

Budgeting During a Pandemic

Feb 2021

Sticking to a budget is hard enough normally — and things are anything but normal right now. Unfortunately, this is one more area of our lives that’s a lot more complicated since the pandemic began. Just as many folks are rethinking how they work and grocery shop, it’s a good idea to look at your household budget and consider whether some adjustments are in order.

 

Budgeting is about planning ahead. But before you do that, review changes in your spending habits since the COVID-19 crisis began. While it may feel like you’re saving money by eating out less or staying home, there may be other areas where you are, in fact, spending more than you did before the pandemic. These might include groceries, utilities and even household repairs, as appliances and other systems in your home deal with increased demand.

 

Once you have a good sense of the increases and decreases in your spending, adjust your budget accordingly. Then, consider the following:

 

1. Bolster your emergency fund. Whether or not you’ve had to tap your emergency fund, consider adding to your safety cushion. With the future still uncertain, see if you can squirrel away an extra $50 a month to put toward repairs or other unexpected expenses. Adding to your Flexible Spending Account (FSA) or Health Savings Account (HSA) can also help cover any unanticipated medical costs.

 

2. Review discretionary spending. Some budget items are necessary expenses, such as food, housing and utilities, while others are optional. Review your discretionary spending, such as multiple streaming services and nonessential clothing. Consider cutting back on these temporarily to liberate additional money for building your emergency fund or paying down debt.

 

3. Seek out savings on essential spending. Curb grocery bills by using paper or online coupons. Buy in bulk and look for lower-cost meal options that include pasta, beans and in-season vegetables. Cut back or eliminate alcohol purchases. Getting creative with leftovers can also help. Look for new budget-friendly recipes to add to your meal-planning repertoire. Many auto insurance carriers are offering discounted rates as well, so check to see if yours is one of them. You can lower monthly insurance payments by increasing your deductible, but only consider this strategy if you can afford the higher out-of-pocket expense.

 

4. Negotiate with creditors and service providers. If your budget is straining, speak to your lenders to see if they can lower your monthly payment or interest rate. They may even allow a forbearance of payments altogether. If you have a mortgage, investigate whether refinancing that loan makes sense for you. Call credit card companies and ask for a lower interest rate or consider a balance transfer to a card with a more favorable fee structure.

 

5. Review your retirement plan. Try to avoid dipping into your 401(k) as this could potentially set you back years on your retirement timeline — as can lowering or stopping contributions. It’s particularly important to contribute the minimum required to receive any company-match funds if possible.

 

Many American families are feeling the crunch right now. You’re not alone. Seek out guidance from those who can help. Setting an appointment with your financial advisor is a great place to start during this challenging time. If you’re under a great deal of financial stress, talk to supportive friends and family. And, if necessary, obtain professional help from your Employee Assistance Program (EAP) or a qualified counselor through your health insurance plan.

 

Avoid These 8 Budget Blunders

Avoid These 8 Budget Blunders

Feb 2021

Creating and maintaining a household budget is a powerful tool for achieving financial goals. But these eight budgetary blunders could tank your best efforts to stay on track.

 

1. Omitting occasional expenses. You (hopefully) don’t have to repair your car on a monthly basis, but it’s unrealistic to pretend it’ll never happen. And just because you don’t know when the next breakdown will be, that doesn’t mean you should leave an occasional bill from your mechanic out of your budget. For unpredictable expenses like these, look back at the cost of prior repairs for an average figure to factor into your budget. As your car gets older, you may want to adjust that estimate up a bit as you’ll have a greater chance of more extensive repairs with a “mature” vehicle.

 

2. Forgetting about small purchases. That daily cup of joe at the train station may not cost you much, but little things can add up when they’re repeat offenders. Capture small expenses like these in your monthly budget. Include things like tips on services and your Sunday morning bagel run.

 

3. Ignoring large purchases. How do you budget for a big two-week summer vacation? It’s important to have a plan if you don’t want to end up with a gigantic credit card bill as a final souvenir of your beach getaway. Tackle large expenses like these by dividing the total cost by 12 and including that amount in a monthly savings budget. That way, by the time you pack your bathing suit and sunscreen, your fun-times fund will be able to cover your costs.

 

4. Relying on memory. When you review your spending at the end of the month, it’s easy to forget a purchase here and there. This is why it can be helpful to look back at electronic banking records to account for every dollar spent. After all, if you don’t accurately align your spending with your budget, what’s the point of making one to begin with?

 

5. Leaving no wiggle room. Always reserve a little cushion in your budget just in case. It’s pretty hard to anticipate every expense that might come up during the month, so don’t budget down to the penny – allow some wiggle room in case you’re overly optimistic in your projections.

 

6. Not paying yourself first. Don’t let planning for your future become an afterthought. Make it a top priority each and every month. Participating in your employer-sponsored 401(k) plan is a great way to make retirement saving automatic. And when by making regular contributions, you’ll dollar cost average into the market, which means you’ll accrue more shares when prices are lower. And everyone likes a bargain, right?

 

7. Being too hard on yourself. Sticking to a budget takes practice and discipline. You might not hit your target each and every month, but it’s important not to beat yourself up if that happens. Try to understand what occurred, make adjustments based on what you learn and get right back on track. You don’t need to budget perfectly to make a positive impact on your financial future.

 

8. Going it alone. Your employer-provided financial advisor is a fantastic resource. Budgeting can be complicated, and your advisor can help you sort through the details. Make an appointment to review your budget or get help setting one up for the first time.

 

Making — and maintaining — a budget is one of the best things you can do to stay on track for your retirement and other financial goals.


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