Budgeting

Ask Jesse: Where should we put our tax refund money?

by Crystal on March 26, 2013

Today’s question is from Jessica:

Jesse,
We recently moved into a home that needs work, we also received money from our tax refund and do not want to blow through this. Where should we put our money that will draw interest and be able to access if needed? This is the first time we will actually be able to save our tax refund instead of using it on our home taxes as our mortgage now is all included. -Jessica

Hi Jessica, getting a tax refund always feels good. Like you said, it is important not to blow through it and later find you could have used it more wisely instead of buying that big new toy you’ve always dreamed about.

If I were in your shoes, I would make sure our emergency fund is built up to what we would need should all other sources of income shut off for six months, especially if you are looking at making some sizable repairs to your house in the future that could be a drain on any excess income you have coming in.

I have always used either a money market account at our local bank or an online account that ties to my local bank that I could easily get to if needed for emergency fund and other savings. The reason was solely for the ease of access.

I never really took the interest rate into account (except for the fact that it was higher than the usual savings account) because quick access to me outweighed the return I would get due to interest because the account was not set up for long-term use, other than the emergency fund.

Jesse Paine is a licensed attorney who owns his own law firm. He’s married to Crystal and is the numbers nerd of the MoneySavingMom.com team! If you have a question you’d like him to answer in a future column, you can submit it here.

The content of this column intended for informational use only and is not to be construed as providing legal, investing, accounting, or other professional advice. Your situation is factually specific and you should accordingly seek qualified professional counsel concerning your specific legal, investing or accounting needs.

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Sign up for the free 10-day budgeting course from Learnvest

by Crystal on July 12, 2012

Learnvest is offering a free 10-day budgeting course.

Sign up for this free 10-day email course and you’ll get financial advice, free financial calculators, and more to help you get your finances in order.

Thanks, Cha-Ching on a Shoestring!

(Note: Some of the links in this post are my referral links. Read our disclosure policy here.)

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5 Ways a Cash Budgeting System Will Change Your Life

by Crystal on May 16, 2012

I’m honored to have an article up on AllYou.com today titled 5 Ways a Cash Budgeting System Will Change Your Life.

Whether you’re struggling to stay afloat financially, or just trying to save money and make smarter spending choices, you should consider a cash budgeting system.

In our family, we use cash-only for most expenses, including groceries, gifts, clothing, miscellaneous items and eating out. This means we allot a set amount to each category monthly, then place that exact amount of cash in individual envelopes labeled for each expense at the beginning of every month.

Here are five reasons I’d encourage you to consider setting up your own cash budgeting system:

1. A Cash Budget Gives You Freedom

For many, just the word “budget” has negative connotations. However, a budget doesn’t have to be restrictive. In fact, for my husband and me, it has had the opposite effect — the boundaries of a budget have given us a freedom we didn’t have before. For example, we don’t have to worry that if we buy groceries, we won’t be able to pay our electric bill.

Head on over to AllYou.com to read the full article.

PSST! Want to chat with other frugal folks about ways to spend less this summer? I’ll be hosting a live chat on the All You Facebook Page next Wednesday at 2 p.m. EST and we’ll be talking about how to save money on summer activities and family road trips!

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How can we save money without feeling like we’re broke all the time?

by Crystal on April 24, 2012

My husband and I recently got amazing jobs after not working for months and now our income is something we have only ever dreamed of earning. We’ve scraped by these past months and now with this extra money we want to spend, spend, spend.

How can we save money and not feel like we are still broke all the time? I guess I am not sure how to budget spending money since I’m not even sure what percentage should go where after our main bills are taken out. We are newbies at saving and really need help. -Samantha

Congratulations on your new jobs and higher income! How exciting!

Here’s some advice I would have for you:

1. Sit Down Together and Set Goals

Before you even think of setting up a budget, I encourage you to sit down as a couple and talk about your goals. Where do you want to be financially in a year from now? What about five years from now?

Do you have debt that needs to be paid off? If so, this should be one of your top priorities when you set goals. Do you have an emergency fund of 3-6 months’ worth of expenses in place? If not, this should be your second goal.

In addition, talk about what things you need to save to pay cash for: Is your car on its last leg? Are you setting aside money for retirement? Is there something fun you’d like to do as a couple in the not-too-distant future (go on a trip, purchase something, etc.)?

Discuss all of these things and make a prioritized goal list denoting your top three goals to work toward right now. These goals will give you purpose for implementing money-saving tactics and they will also give you momentum to make wise choices financially.

2. Break Your Goals Down Into Bite-sized Pieces

After you’ve determined your goals, you need to take those big goals and break them down into manageable pieces. I recommend that you set yearly goals and then break those down into monthly goals. Then, take those monthly goals and break those down into weekly goals.

For instance, if you want to save $2500 this year, you’ll need to save a little over $208 per month. That means, you’ll need to save $52 per week — or around $10.50 each weekday.

When you break your goals down into these small pieces, they become much less daunting and much more manageable. Plus, you have a very concrete number to work toward instead of a huge, seemingly overwhelming goal.

3. Create a Written Budget

Once you have your goals in place, it’s time to set up your budget. If you’ve never had a budget before, my book, The Money Saving Mom®’s Budget, outlines how to set up a grocery budget, then a barebones budget, and then a full-fledged budget. I included spreadsheets and step-by-step help to walk you through how to do it. This process is especially beneficial for people who are brand-new to budgeting and completely stressed out over how to pull it off successfully.

If you’re ready to jump in with two feet, Dave Ramsey offers a free online budgeting tool that walks you through setting up your budget and includes suggested percentages to include for each category. Remember to budget for your financial goals before budgeting for fun stuff and extras. Short-term sacrifices will always pay off in the long run!

4. Plan for Strategic Splurging

Once you’ve set up your budget and covered all your necessary bases and your financial goals, now comes the fun part: budgeting for strategic splurging! A lot of people have this idea that a budget is a straight jacket that removes all of the excitement and spontaneity from your life and instead relegates you to a miserable existence.

I heartily disagree. A budget actually gives you freedom!

When you make your money work for you, you have more to work with. In turn, this means you can budget for fun and splurging — and you can enjoy it more because you know that going out to dinner or that occasional coffee at Starbucks is something you planned for, not something that’s going to wreck your finances or keep you from being able to pay your electric bill.

Life is meant to be savored — and a budget can be a tool to help you enjoy life a lot more, without the guilt!

What advice do the rest of you have for Samantha and her husband? I’d love to hear!

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Is it possible to survive on a $30 per week grocery budget?

by Crystal on April 17, 2012

I am single and have about $30 per week for groceries which I find hard to do and get a balanced diet. I do go to multiple stores to get the best prices and use coupons the best I can. The thing that bothers me, is when a staple item I use is on sale, I normally don’t have an extra $5 (let alone more) to spend to purchase it. How can I stock-up on sale items when I have such a little bit to get by with anyways? -Renee

Contrary to what many people may tell you, I think you can definitely eat well on $30 per week — and you can find a little wiggle room to buy ahead, too.

My husband and I both lived on a $30 per week grocery budget when we were first married. This included all the ingredients to make 21 meals for both of us each week, plus all household products.

A Can-Do Attitude Is a Must

Don’t let yourself think, “There’s no way I can eat on this small of a budget.” Instead, decide that you’re going to do the best you can with the resources you have.

Make it a game, of sorts, to see how well you can do on a little. By challenging yourself to exercise creativity and think outside the box, you’ll enjoy it a lot more. And when you’re enjoying something, it no longer seems so difficult.

Make Short-Term Sacrifices

In order to be able to scrape together enough money to start buying ahead and building up your stockpile, I’d encourage you to commit to eating really simply for a few weeks. Cut your grocery budget back to $25, and save the extra $5 to invest in those rock-bottom, can’t miss deals — or to purchase almost-free toiletries and household products.

If you’re thinking there’s no way you can eat on $25 per week, here’s a grocery list and menu plan I came up with:

Sample $25 Grocery List and Menu

Prices are approximate and will likely vary a little by area. You may be able to beat these prices with great sales and/or coupons.

Regular Grocery Store, Aldi, or Walmart

1 canister of oatmeal –$2
1 gallon milk — $2.50
1 bag of apples — $3
1 bag of carrots — $1.50
4 bags of frozen vegetables — $4
1 bag of frozen chicken breasts — $7

Dollar Store

1 loaf of bread — $1
1 jar of peanut butter — $1
1 jar of jelly or honey — $1
1 bag of dried beans — $1
1 bag of rice — $1

Breakfasts:

Oatmeal with milk (add in some chopped apples, honey, or peanut butter to change things up a little)

Lunches:

Peanut butter and jelly sandwiches, apples, carrots

Dinners:

Beans and rice with steamed veggies on the side
Chicken, rice, and carrot soup
Baked chicken breast on a bed of rice, steamed veggies
Rice, chopped chicken, and steamed veggies mixed together and sprinkled with salt
Homemade refried beans, baked chicken, steamed veggies
Chicken and veggie stirfry served over rice
Leftovers

Yes, this isn’t a very exciting menu. But if you’re willing to scrimp for a few weeks and eat very simply, it will free up that extra $5 or so each week to start buying a few extra things that are on a great sale (like a bag of flour, like that incredible deal on strawberries — some to eat now, some to freeze for later, or that fantastic special on beef).

As you invest some of your grocery money in the rock-bottom specials and deals, this helps you to build up more of a stockpile so that, over time, you’ll be able to have more and more variety without increasing your budget.

For more grocery saving ideas, be sure to check out my 31 Days to a Better Grocery Budget series.

Do you think you can eat well on $30 per week? What advice or suggestions do you have for Renee?

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Does budgeting really work?

by Crystal on March 09, 2012

Do you despise budgeting or feel overwhelmed by the thought of trying to create and maintain a workable budget?

Hop on over to Amy’s blog for another installment of The Money Saving Mom®’s Budget Book Club. She’s talking budgets (or lack thereof!) today. I think you’ll be encouraged by what she and her commentors have to say!

And if you want step-by-step instructions on setting up and sticking with a budget, be sure to get a copy of my book, The Money Saving Mom®’s Budget. I tackle realistic budgeting in chapter three–and I break it down into bite-sized pieces so it’s not overwhelming. And it just might change your whole financial situation!

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Free 2012 Financial Workbook (Excel download)

by Crystal on January 20, 2012

Want to track your expenditures and stick with your budget this year? Andrea from Simple Organized Living is offering a free 2012 Financial Workbook Excel Download.

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Mvelopes: Free online budgeting tool

by Crystal on January 06, 2012

Crown is offering their Mvelopes online budgeting system for free in 2012.

If you’ve used this system, I’d love to have you share your experiences in the comments.

Thanks, Cortney!

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Ask the Readers: Recommended financial management software?

by Crystal on December 28, 2011

Today’s question is from Amanda:

I am trying to find the right financial management software for budgeting and help with my bills. I am a recent college grad (’08) who just secured my first “big girl” job and would like to get started on the right foot. I’ve explored Mint.com, but couldn’t grasp it. Sounds silly for a college grad, but any money management budgeting tips or software you know of or could suggest would be great! I’ve searched and haven’t been able to locate anything. - Amanda

You can read more about how our family tracks our finances here. I’d love to hear what works for the rest of you!

Do you have a question you’d like to ask Money Saving Mom® readers? Read the submission guidelines and submit it here.