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6 Reasons We Overspend

6 Reasons We Overspend

You begin every month with the best intentions. You make a budget and plan to stick to it. So how come you find yourself coming up short by the time the next payday rolls around?

1. Impulse purchases. Have you ever gone into a store to pick up one small item and left with a bag stuffed full of merchandise you didn’t intend to buy?

What you can do. Impulse purchases are more likely when you’re rushed, tired or under stress. Try to avoid online or in-person shopping under these circumstances, and always bring a list to the grocery store.

2. Missed savings opportunities. Don’t you hate finding out that the very thing you just bought was available from another retailer at a lower price?

What you can do. Think twice about squeezing in some quick online shopping during your lunch hour. Plan purchases well ahead of time and give yourself the opportunity to comparison shop for the best deal. Purchase from stores that have a price protection policy in case your item goes on sale later.

3. Buying on credit. It can be easier to overspend when you use plastic, especially when it doesn’t feel like “real money.” And you can quickly lose track of growing card balances that make even the items you buy on sale a lousy deal after factoring in hefty interest charges.

What you can do. Pay cash whenever you can — and bring only enough money for items you plan to buy. Be careful about reflexively using credit cards for a cashback or travel benefit. You may find it’s not worth it in the long run. You can also use your debit card, which is more likely to make you stay within your available balance. If you do use credit cards, pay off balances in full each month.

4. Unexpected expenses. Sometimes we spend too much because we don’t anticipate purchases that we probably could have — like a car repair for a vehicle with 150,000 miles.

What you can do. This is why it’s so important to establish an emergency fund to cover at minimum three-to-six months of regular expenses (more is better if you can) or an occasional big repair bill. And beef up your savings target if your car or house or computer is older.

5. Falling for a sales pitch. It’s the cliché of the pushy used car salesman that comes to mind, but coming across slick or aggressive salespeople is sadly a common experience. Sometimes, they can persuade us to act against our better judgment.

What you can do. Know your limits in advance. Set a cutoff for purchases and be willing to walk away. You can always fake an emergency phone call or restroom trip to buy yourself time before you pull the trigger on a purchase. Remember that you can always come back later to buy.

6. Impulsive holiday or vacation spending. It’s easy to get swept up in the moment during holidays or your annual summer trip to the theme park, especially when you want to make special memories for loved ones.

What you can do. Include holiday and vacation spending in your household budget. Put a little bit aside each month before the event. You can also open a separate special occasion fund.

Simply having a budget isn’t enough — you have to stick to it to get the benefits. Talk to a WellCents financial professional to help you crunch your numbers and figure out a sensible strategy to stay the course.

Holiday Gifts That Won’t Break Your Budget

Holiday Gifts That Won’t Break Your Budget

You’ve done a good job of sticking to your financial plan all year, but when it comes to holiday gift giving, it’s easy to let good intentions knock you off your savings path. According to the National Retail Federation, Americans spend about $1,000 on winter holiday gifts. That can be a real budget-buster, but meaningful gifts don’t have to come with a hefty price tag. We’ve got some $25-or-less gift ideas for everyone on your list.

Celebrate Coworkers
Office gifts are part of work culture. Maybe you manage a team and want to give your group a token of appreciation. Or you know one person who always gives gifts, and you want to return the favor. A work-appropriate gift that won’t put your account in arrears could be a nicely bound notebook, a quality writing pen or a gift bag of color-coordinated office supplies like paper clips, magnets and Post-it notes. Keep it professional but fun to brighten your coworkers’ day.

Seasonal Presents to Service Providers
Postal workers, hair stylists and even your GrubHub driver are people you might want to thank during the holidays. A batch of your favorite cookies presented in a festive box or tin is a low-cost way to show your gratitude for a year of good service. Make it extra special by including a handwritten note and a copy of the recipe.

Thank Your Terrific Teachers
Whether it’s your child’s 4th grade teacher or your yoga instructor, there’s lots of reasons to give extra thanks to the people who help us learn and grow. A pick-me-up, like a $10 gift card to a coffee shop, can help any teacher start their day off right. Make it more meaningful by supporting a local business close to your favorite teacher’s place of employment. Bakeries, ice-cream parlors or tea shops often offer gift certificates or cards that you can package in a pretty envelope or decorated box for that personal touch. 

Great Gifts for Grandparents
Grandparents, aunts, uncles, cousins — you want to remember your extended family in your holiday giving, but the costs can add up. Go for truly personal, budget-conscious family gifts by using the photos you take during the year to make photo-mugs, photo-calendars or even a family photo t-shirt! You can look online for low-cost, photo-personalized gift services. And at some big-box stores or national pharmacies, you can connect your camera or thumb drive to their in-store kiosk for easy ordering and processing.

Treat Yourself Too
No one should fault you for indulging in a holiday gift to yourself, but you should be as mindful here as you are in your presents to others. Money you receive as gifts (and funds you save by using our budget gift ideas!) can add up to a special treat and an end-of-year contribution to your retirement savings account. Talk to your WellCents financial professional about how catch-up contributions can help maximize your retirement savings and give your future self the gift that keeps on giving — a more financially secure retirement. 

Coping With Financial Setbacks

Coping With Financial Setbacks

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

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

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.

 


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