How To Create A Monthly Budget To Save Money

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Money is tight these days, and cash certainly doesn't grow on trees. If you feel like you don't have enough money to meet your basic needs, it is very easy to feel helpless and alone. According to recent data, around 75% of Americans say that they are struggling financially, so you can rest assured that you are in good company. Much of the United States and global population struggles with personal finances in one way or another, especially with public health crises and inflation causing additional strain. Financial struggles are even gripping the upper middle class in the U.S. and much of the world due to severe inflation and economic volatility. The global economy and the personal finances of billions of people is looking rather grim right now.

One of the major reasons why the majority of people are in such a poor financial state is lack of education on money management and a limited understanding of budgeting. If you don't know your numbers and can't put a plug in your spending, you are setting yourself up for financial failure. 

Unfortunately basic financial education just isn't something they teach at a lot of schools or even colleges. That is starting to change out of necessity, but most students even with above average intelligence have very little knowledge of money or budgeting.

Learning how to create a monthly budget won't solve all of your financial stress, but it will certainly make it easier for you to feel secure and afford basic living expenses. And every little bit of extra budget-friendly financial security helps these days in a time of economic turbulence coupled with rampant inflation.

Read on to learn how you can set this frugal budget and ensure that it works for your specific financial needs. 

Use a Budgeting App To Stay On Track

For those who have trouble keeping track of a lot of papers, budgeting apps can work wonders. You can conveniently enter your information into budgeting mobile applications including your necessary expenses, income, changes to your finances, and more. Pretty much all of them connect with your bank and do the math for you by figuring how much you need to allocate where. 

PocketGuard is one of the best free apps that connects your credit, checking, and savings accounts to better your budget planning. It detects your recurring bills and compares them to your income before showing you how much you have remaining for other expenses. From there, you can master your monthly budget for groceries and household needs that exist outside your recurring bills. 

One of the greatest things about PocketGuard is that while it categorizes your expenses automatically, you can also create custom categories for the best budgetary plans. This lets you include the things that are important to you within your monthly budget to find areas of improvement and savings. 

Write All Expenses And Bills Down 

In addition to having a budgeting app, you'll want to write everything about your budget down on paper. You can place this above your desk at home or on the wall beside your calendar. When you see it, you'll remember how much you have to spend and where your money should be going to. 

Writing things down also has been proven to improve memory. It forces your brain to process things in a more detailed way. Writing the details of your budget will help you to keep it in mind throughout the remainder of the month, even when you're at the store with a dead cell phone battery and no physical list to look at. 

Consider The Expense Essentials First 

Before setting a budget, you need to consider your recurring payments like rent, utilities, insurance payments, student loans, and routine medical bills. You can't stop these bills from coming and missing them will ding your credit score and accrue interest. 

The next budgetary thing to think about are essentials like groceries and household items (toilet paper, pet food, etc). Be realistic about what you can afford and make sure that you don't end up in a situation where you have no food at the end of the month. Cheap grocery stores like Aldi, Dollar Tree, Dollar General, Family Dollar, Costco, BJ's, and Wal-Mart are a great way to save money when shopping for everyday items at retail shops. 

And keep in mind that you can still eat healthy on a budget if you follow The Frugal Diet, so there are no excuses to eat junk food in the name of saving money.

Include Entertainment Money 

When creating your budget, make sure that you don't forget to add at least a bit of spending money. You need some cash to go out with friends if you want to maintain your mental and social health. You also will want to treat yourself to a new book, video game, or just some takeout food every once in a while. While minimalism and frugality help budgeting significantly, you probably won't be living like a monk either. We're all human after all and can't penny pinch 24 hours a day, 7 days a week, 365 days a year.

If you don't have a specific amount of money set aside for things that you want, you're likely to become frustrated and pull from other necessary areas of the budget. In the end, you'll probably wind up spending more on entertainment than you would if you'd just put it into your budget in the first place. If you need to save even more money on your entertainment costs, consider using a top torrent to download media free of charge.

Don't Forget About Savings 

If you're struggling financially, you likely feel as though you're surviving rather than living. You are probably sick of feeling like you are just barely keeping your head above water while living paycheck to paycheck. You likely are wondering how to eventually buy a condo or travel around the world so that you can start living your best life. The answer to making this happen is simple: saving money. 

This is a challenge for most people, but you need to set aside at least a few dollars a week to go into savings. Even if it's just $10, you'll end up with $40 per month and $480 per year. This might not sound like much, and you should invest more if you can, but it's definitely better than nothing. A penny saved is a penny earned, and money saved by paying down debt or earned with compounding interest is more than just a penny! We all have to start somewhere when it comes to smarter saving and better budgeting.

Pay Cash Whenever Possible 

When you swipe a credit card for all of your expenses, it's easier to charge more than you have in your bank account. It doesn't feel like you're spending real money. It's even worse when shopping online with saved payment information. You need to remind yourself that every dollar counts and that when you buy something, you're investing actual cash into it. 

Using cash also makes it a lot easier to track how you're spending money in your financial budget. You can place it into envelopes that are marked with what you need to spend it on at the beginning of every month. This can help you conceptualize how much you have to spend where. Physically finding, dividing up, and paying with money helps keep you more accountable than using credit cards and digital payments so prevalent and frictionless today.

If you see that you absolutely need more money for groceries or a similar necessity, you can place more money into the grocery budget envelope next month and see if that works. The bottom line for budgeting is that paying cash makes it easier to conceptualize your finances on a concrete and realistic level. This will help you maintain your fiscal fitness and frugal financial foundation. 

Credit cards do have their upsides if your finances are in order and you use them correctly. They can help to build your credit and earn cash or point rewards when used properly. Just make sure to make credit card payments in full and consistently. 

Beyond How to Create a Monthly Budget 

While budgeting is a challenge for nearly everyone, it's completely possible with a bit of planning and foresight. Now that you know how to create a monthly budget that works for you and your household, it's time to start looking into other aspects of your frugal financial affairs. 

Check out the 'frugal finances' tab on our home page for more tips like those you've read here today. If you need a bit of a money boost, we also discuss where you can take out personal loans under the 'loans' tab of our frugally financial blog. Good luck with creating the perfect plan for your individual frugal budgeting needs!

7 Retirement Savings Goals To Retire Right

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Are you in your early 20s and just starting to make your own real money? Or are you already in your mid-40s with kids starting to grow up? Regardless of your age, you need to consider planning for your retirement to achieve ideal results. Without a retirement plan, you may be working into your late 60s or even early 70s! This is not a scare tactic or an attempt at financial shaming. It is an unfortunate reality, especially with social security at risk of being gutted in 2023 or 2024.

It is sad to note that a quarter of Americans do not have savings for their retirement. Younger people aged 18 to 29 make up 45% of Americans who do not save up much or anything for their future retirement. The retirement numbers, however, improve as people age. 

Nevertheless, millions of Americans do not know how to save enough money. The key is to set retirement savings goals so you can retire right and before you get too old or frail to enjoy life.

You must take your retirement planning into your own hands because nobody can guarantee Social Security, Medicare, and your investments will remain fully intact when you reach age 65 or 67. If you want to retire even earlier, you must be even smarter and more aggressive with your earnings, savings, and investing.

Continue reading below as we discuss seven important goals for your retirement planning done right.

The Need to Save Up Early

We see it in the media and we hear it from senior citizens we know: An elderly person ending up dirt poor upon reaching their retirement age or very shortly after. 

Though many are aware of the risks of not having a retirement fund, they still do nothing about it until they are all too close to being retired.

The only time they will scramble to save money for retiring is when they are too old or weak for a 9 to 5 job. Sometimes, they will only realize the importance of a retirement plan when it is all too late.

Hence, you need to start somewhere with your retirement planning. In case you feel that you cannot keep up with the savings, there are options like the Secure Act to give you a boost. 

But the best way to kick-off your retirement plan is to come up with retirement savings goals. And you need to start working on them as early as today if you want to retire right tomorrow.

Retirement Savings Goals

When it comes to financial goal-setting, there is a lot to consider. However, some money goals are non-negotiable. Furthermore, you need to realize that these retiring financial goals come with a timetable.

You need to attain specific retirement goals once you reach particular age brackets. These financial goals should also take into account inflation and taxes, since both are on the rise.

Let’s take a look at seven of the most important savings goals you should focus on to retire right.

1. Start with an Emergency Fund

The best time to start working on your retirement goals is in your early 20s. This is the time when you are on your first or second job. Thus, your first goal is to have a fully-funded emergency fund by age 25. 

An emergency fund will serve as the backbone of your retirement plan. In case an emergency happens, the fund will cover the expenses. You want to create a fund that is equivalent to at least three to six months’ worth your salary.

Also, consider securing personal health insurance. By age 26, you will be living on your own. Hence, you don’t want to get sick without any coverage or it could cost you a fortune for treatment.

Finally, this is also the stage where you need to start your contributions to your retirement fund. Try to go for an IRA or 401(K). If you start your contributions while you are young, you will maximize the power of compound interest. When it comes to investing, sooner is better!

2. End Your Student Loan Debt

Once you reach 30, your focus must be beefing up your financial foundation. Thus, your first goal is to settle your student loan debt as fast as you can. This is crucial considering you’ll soon need to save up for your kids’ college tuition. To pay off your student loan sooner, consider a debt consolidation company.

Once you put to bed your student loan debts, start working on your home down payment. You want to have a home you can truly call your own, right? Then save around 10% to 20% for the down payment. 

If you already have a family, consider buying a life insurance policy. Also, establish a last will and update it every year to protect your family finances.

Lastly, increase your retirement contributions to 15% of your income to ensure you can retire securely.

3. College Plan for the Kids

By the time you hit your 40s, your main goal is to work on your kids’ college expenses. Don’t be like other parents who only start worrying about their kids’ college when they are a year away from it.

But first, make sure to eliminate all your consumer debts. These are debts that are outside your mortgages.

Moreover, make it a goal to save an amount that is twice your annual income. This is the amount you want to put into your retirement fund.

4. Reach Your Maximums

While still in your 40s, you also want to hit your savings maximum. Doing this will help you reach a target of having $1 million worth of savings by the time you reach 67. 

The computation is to save $10,000 every year with a 9% interest rate in effect. Sounds hard? This is doable if you fund your 401(K) up to the maximum limit.

5. Mix and Maintain

Another important goal for aspiring retirees is learning how to mix and maintain your investments. 

The key to maximizing the gains of your investments is diversification. This means not placing all your eggs in one basket. 

People in their 40s still have a relatively high-risk appetite. However, they must also be wise where they put their money. 

Consider investing in stocks, ETFs, and mutual funds. But make sure to leave some of your investment eligible money for more conservative options like bonds or even gold.

Additionally, you need to learn how to make tough financial decisions when necessary. Make some financial compromises with your purchases if needed, but not at the expense of your retirement savings.

6. Go the Extra Mile

By the time you hit your 50s, your goals must be solidifying your financial foundation. Do this by paying extra on your home loans or mortgages. This is doable now that you already eliminated your consumer debts.

If you finish securing your children’s college fund, channel some of your extra dollars toward your home mortgage.

Additionally, consider buying long-term care insurance when planning for retirement savings goals.

7. Apply the Finishing Touches 

Once you reach your 60s, your goal is to fine-tune your retirement goals. Talk to a financial adviser and ask for guidance if you need to make any tweaks in your finances.

Also, revisit your life insurance and last will. Update these financial policies if necessary. 

It is also about time to transition your investment portfolio to being more risk averse. Consider transitioning some of your stock holdings into bonds or annuities if it makes more sense.

Increase Your Financial Knowledge

By working on these retirement savings goals early, you will save up more money without feeling much pressure. Furthermore, you will get to secure the future of your kids and avoid becoming a financial burden in retirement. Retire right!

But financial knowledge and budgeting isn’t all about retirement. Hence, we invite you to increase your knowledge by checking our other articles to help you retire securely. We provide guides and tips to help you become a wiser manager of your financial and retirement resources.

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