No one cares more about your financial well-being than you, so having a personal financial plan is important. Knowing how to make a financial plan will allow you to save money, afford the things you want, and achieve long-term goals like saving for college and retirement.

This probably won’t come as a surprise, but everyone’s money plan looks different. If you’re wondering what makes a solid financial plan or even “what is a financial plan?” you’re in the right place.

In my opinion, money planning is critical, especially financial planning for women.

We all want to be financially independent and build wealth. Deciding to embark on the journey toward financial independence is a big deal!

It marks a fresh beginning with our money, and it means that we’re setting out to accomplish something that can change our lives for the better.

In this article, I’ll explain everything you need to know to plan for your future (I follow these same steps for my own finances).

So keep reading, and get ready to take some action to kick-start your own solid money plan.

What is a financial plan?

It’s simply a structured approach to reach your financial goals. It details your current money situation and financial system, including investing, saving, retirement, and estate planning.

In addition to these key elements, you may also choose to include milestones that you’ll reach along your financial journey to help with your long-term success.

So, what is a financial plan, in simple terms? It’s simply a long-term, organized approach to money management.

Create a list of things to plan for

Let’s start by creating a list of things you’ll need to have or build on your journey to financial security. These items below are essential to your money plan (Click the links below to delve deeper into each!):

• A monthly budget to help you keep your expenses below your income
• A debt reduction strategy and spending plan (using your budget)
• An understanding of all your bills and their due dates
• A fully-funded emergency fund
• A plan to start saving for retirement
• A diversified portfolio of investments
• Multiple sources of income
• Savings for the other things you want (e.g., your short, mid-term, and long-term goals)
• The right types of insurance coverage (Life, health, disability, home, etc.)

Now that you are aware of what to plan, let’s get into exactly how to create your financial plan.

How to make a financial plan

Below, you’ll find twelve steps for how to make a financial plan. These steps will cover all the basics to help you get started. Keep in mind that your plan is unique to you, so feel free to customize it as necessary.

1. Write down your financial goals

Having financial goals is the foundation for your financial success. After all, you have to know what you want to do to accomplish it.

However, when setting goals, you want to ensure that they are well-defined and prioritized accordingly.

It’s great to have big, lofty goals! But be sure to break them down into smaller chunks. That way, you’ll not be overwhelmed by the task and can easily measure your progress.

Your financial goals include anything from getting a new job with higher earnings to paying off student loans, car loans, and credit card debt. What’s important is that you know your priorities.

Evaluate your money situation

As you create your goals, knowing where you’re at with money is important. You should take time to understand your relationship with money and what you’d like to do differently.

You should also go over the numbers.

For instance, I might ask myself about my money: how much debt do I have? What does my savings account look like? And do I have any money invested?

Getting answers to these questions will help you know where to start.

2. Make a budget

Budgeting is a key part of how to create a financial plan that works. Without knowing exactly how much money you have coming in compared to your total outgoings, it’s impossible to save for the future or make smart financial decisions.

A budget must work for you, which means finding a method that suits your circumstances. The 50/30/20 rule, or the cash envelope system, or zero-based budgeting are all popular ways I recommend budgeting.

To create my budget, I go over my bank statements to make a list of all my regular outgoings. Then, I group the expenses into lists of “needs” (housing, utilities, groceries, travel, etc.), “wants” (shopping, leisure, and entertainment), and “savings.”

Next, I’ll total up my income. Income includes any interest or property rental income I might receive in addition to my monthly salary.

Then, I’ll take away my monthly expenses from my income and see if I have any money left over or have a shortfall. If it’s the latter, I ask myself, where can I make cuts?

Now you have your monthly budget, you can realistically use your money plan to set targets for the future.

3. Start an emergency fund

It’s also really important that one of your goals includes a plan to deal with emergencies. You want to make sure you are prepared to weather a storm. Otherwise, you’ll just end up in debt again.

Your emergency fund should have enough money to handle at least a few months of expenses and more if you want. Make sure the amount is something you’re comfortable with and that it will help you if something unexpected happens.

4. Pay off debt

When you make your money plan, be sure it includes a debt management system and a plan for paying off debt. Sadly, you can’t really kick-start your financial future if you’re carrying a ton of debt.

Between sky-high interest rates, large minimum monthly payments, credit card balances, and the damage lots of debt can do to your credit score, you’re better off prioritizing paying your debts.

Create a debt pay-off strategy and be patient but consistent. Work towards being able to say, “I’m debt-free!”

5. Track your spending

A master plan for your money should be an accurate representation of your finances, which means accounting for exactly where your money is going.

My favorite way to track my money is using an expense tracking sheet or app such as You Need A Budget. I can manage my money easily and access my finances anywhere and anytime.

You do need to commit to logging your purchases regularly, though, so an app or sheet may not work for you if you don’t like admin work!

A pen and paper or a budget planner will work just as well! The important thing is that you track every purchase you make and use the information you find to cut spending and improve your finances. Remember to adjust your budget accordingly!

6. Invest your money

If you are serious about building wealth and want to know how to make a financial plan, you’ll need to put your money to work, which is where investing comes in.

However, before you invest any money, it’s important to have clear objectives. Think about the reason for the investment, when you’ll need the money, and what your risk tolerance is.

Investing is a long-term activity, so you have to commit to it if you want to see your money grow.

Worried that you’ll need your money in the short term? Well, that’s what your savings accounts are for. Put aside your emergency savings and money for your short-term goals (i.e., the money you’ll need in 5 years or less).

You also want to ensure you have a basic understanding (at minimum) of any investment you make (e.g., the stock market, real estate, or small business). You should also understand investment terms.

Your investment plans should be part of your monthly budget, where you allocate a certain percentage of your income toward your investment goals.

7. Get the right insurance

After working so hard to earn your money, the last thing you want is an unplanned occurrence to wipe you out. Insurance is essentially your backup plan, protecting your assets in the event a life circumstance occurs that requires a large amount of money to resolve.

I make sure my insurance coverage includes health insurance, auto, disability, life, home or rental, and business insurance.

Basically, I want to protect anything of major importance and high value to ensure that I (and my loved ones) are protected financially.

Having the right insurance can turn what could otherwise be a major disaster into a mere inconvenience.

8. Create a plan for retirement

To have the lifestyle you dream of in retirement, you need to plan adequately for it.

You’ll need to determine how much you will need after retiring from work, considering inflation with your retirement income, and how you plan to save and invest for that period. Opening tax-advantaged IRAs (individual retirement accounts) helps you get more from your savings by paying less tax.

While retirement might seem like a lifetime away, it’s never too early to start! Preparing for retirement is how to make a financial plan that will enable you to live life on your terms when the time comes!

9. Plan for taxes

Yup, taxes! Taxes are annoying, but they’re certainly not going away anytime soon.

So, make sure your long-term income projections include taxes. Avoiding tax planning can impact your cash flow in a major way.

In addition, you definitely want to look into tax-saving investment options and stay up to speed on any relevant tax deductions you can apply to help you save money on tax payments.

You can consult a tax accountant, financial advisor, or robo-advisor to help ensure your tax system is adequate. You should also check out our blog post on how to reduce your taxable income!

10. Create an estate plan

Estate planning is not something many people like to think about, but it’s essential! It allows you to determine exactly what happens to your assets after you are gone.

It involves listing out all your assets, creating a will, and making it accessible to the people who need to have access to it. A financial planner or an estate planning attorney can help you set things up correctly.

This is an important part of my financial plan because I intend to transition generational wealth to my children.

11. Review your plan frequently

Once you have your money plan outlined and churning along, it’s important to review it frequently. Then, make the necessary adjustments if your goals or the circumstances around your life change.

For instance, maybe your insurance needs to change, or how risk averse you are changes, or you get married or have kids. At a minimum, you want to check your overall financial system at least every six months.

I find that when I check in frequently, it’s easier to deal with unplanned life occurrences, bounce back from setbacks, and accomplish my financial goals.

Example of adjusting your plan as you go through different life stages could be as follows:

• Young adult: Ages 18 to 25 is a great time to focus on saving as much as possible and reducing debt to prepare for the next stage of your life.
  
• Foundations and family: Between ages 26 to 45 you may decide to become a homeowner and a parent in this phase. Now is a good time to try to generate more income or cut unnecessary expenditure as new expenses come in.
  
• Retirement: Based on the age you plan to retire, it’s time to enjoy your hard work and savings efforts. Plan out what withdrawals you’ll need to make from your nest egg on an annual basis. At the same time you’ll want to ensure the money you don’t need to spend keeps growing.

When drafting your financial plan, don’t forget to factor in your aspirational needs such as vacations and car loans. Whilst life doesn’t always go to plan, it’s important to be as financially prepared for events as possible to avoid getting into debt.

With each financial plan review and life stage, you can also speak with a financial advisor for specific guidance if you feel the need to do so.

12. Stay the course, avoid overspending and learn from your mistakes

Your journey to financial independence won’t always be easy. There will be some tough days, weeks, and even months.

Have a solid financial plan, be disciplined, and avoid overspending. You’ll find out how great you’ll feel when you really make a concerted effort to stick to your budget.

As you work on your finances, you may still make mistakes with your money, and that’s okay. Sometimes, you might be unable to resist the urge to buy something that isn’t in your immediate budget. And sometimes, you will feel like ripping your entire money plan to bits because it just doesn’t seem fun.

However, as long as you keep your reasons WHY you want to be financially free in focus and try to rebound quickly from your mistakes, you’ll do just fine.

It’s all about assessing your mistakes, understanding why you made them, and making a plan to avoid making them again. Then, you’ll need to take those lessons and apply them to your future success.

Expert tip: Consider your needs for each life stage

In my opinion, financial planning for different stages of your life is the smartest move you can make. During your life, there will be changes to where your money is spent and your financial interests and goals, and it’s important to consider these carefully. You may find that instead of rent prices you start thinking about mortgages and how to get one.

For example, when I was in my 20s, my main goal was to reduce my debt to improve my chances of being approved for a mortgage. But now I’m a homeowner in my 30s, I want to make sure that I am financially stable for my children and their future by making smart money-related decisions (that means no more blowing money on clothes that I don’t really need!).

Determine the type of financial plan you need

Part of learning how to make a financial plan is determining what type of plan you need. Don’t think it’s too early or too late to organize this. Quite the contrary—now is the PERFECT time to start!

Make a plan for yourself if you’re single

If you’re single, it’s important to establish goals and systems that not only help you meet your immediate money needs but that ensure your future self will be taken care of.

A big mistake is assuming you’ll meet someone who will care for you and deal with the finances in your relationship.

If your relationship status changes or you get married, you’ll be well-equipped to plan your finances together if you already have things in place for yourself.

How to make a financial plan for your marriage

If you are married or have a significant other, you need to manage your finances as a team.

Discuss your budget and money goals and make financial decisions together. Understand where your money is going and how much money you have in savings and investments.

Should you have joint accounts or separate accounts?

Having joint accounts is great for finances in marriage, but I also believe in having your own personal savings accounts. As women, it’s important for us to build our own sense of security and have “our own” money that we bring to the table.

But don’t feel like you need to keep your personal accounts secret. Remember, marriage and committed relationships thrive on openness and honesty.

Tips on how to frequently review your financial plan

Now that you know how to make a money plan, here are some tips to help you check up on your goals.

1. Establish a routine

Allocate some time each week or, at minimum, once a month, unfailingly, to do a financial checkup.

Make it a coffee date with yourself, or put on some nice music, grab a warm cup of tea at home, and spend some time checking in on things. It’s a good idea to set a reminder on your calendar so you don’t forget this check-in.

2. Set and review your financial goals

If you haven’t already, it’s important to lay out your short and long-term financial goals, so you know exactly what you are working towards with your money.

As time progresses, you want to make sure you review and reassess your goals to make sure they are still things you want to accomplish and that you are on track to meet them.

3. Reconcile your bank accounts and bill payments

Check your bank account debits against any bill payments you previously scheduled or sent out. Make sure any pending bills or debt repayments have been paid or scheduled.

Compare your receipts against your credit card transactions and confirm the balance. Do a budget review and compare your actual spending to your budget. Once a month, establish your budget for the upcoming month. 

4. Review your savings and investments

If you have automated your finances and are set up to make transfers to your savings or investment accounts, check in on them. This would also include any automatic deposits you have set up for your retirement accounts, etc.

If you don’t have automation set up, make or schedule your manual transfers to your savings and investment accounts, and be sure to check and make sure the transactions went in successfully.

Also, plan to review your overall investment portfolio to rebalance and diversify as needed, or try automatic rebalancing. Be sure to review your fees too!

In addition, bonds are good options to add to your portfolio if you’re risk-averse.

5. Review your insurance policies

You also want to ensure you have the right insurance for your life. Which includes health, auto, disability, home, personal property, and business, as well as understanding the importance of life insurance, etc.

Set a reminder for twice a year where you sit down and evaluate the costs of your various policies and shop around to see what else is out there.

6. Check your net worth

Your net worth can almost be described as the thermometer used to measure your financial health, and you want to keep track of it, including your net worth by age.

Your main priority should be to pay off as much debt as possible, starting with your high-interest debt. Then, grow your assets, and your net worth will grow over time.

It’s also important to track your net worth over time to ensure you are in line with your long-term goals and financial objectives that you’ve set out to accomplish.

Many people start out with a negative net worth, but as they work on improving their finances, given time and the continued practice of good financial habits, this will change.

Reconciling your accounts and planning your finances ensures you are aware of everything happening with your money and that you are on the right path to accomplish your goals.

Questions to ask when you review your financial plan

Some questions to help you along with the process could include:

1.  What steps did I take this past month that got me closer to my goals?
2.  What things happened that have put me further away from my goals?
3. Was my spending in line with my personal core values?
4. What money mistakes have I made in the last month?
5. Why did I make them?
6. Are my financial goals still realistic?
7. What big expenses are coming up soon?
8. Is my emergency fund fully funded with 6 months of expenses based on my current basic expenses?
9. Am I saving enough to retire comfortably according to my decided retirement plan amount?
10. Am I meeting my other short-term savings and investment goals?
11. Am I on track with my savings for my children, including 529 plans?
12. What steps can I take to ensure I have a better month next month?

Tip: Keep a journal where you answer these questions and then review your past entries every few months. It’s a great way to stay motivated, especially as you see the progress you are making over time. If you stay committed to improving your finances, you WILL see progress.

What is a financial plan using an example?

Take a look at the example below for inspiration. Use it as a starting point and edit it to suit your unique financial situation and life goals.

A good financial plan should include details of your:

• Monthly income
• Monthly expenses
• Savings
• Debts
• Assets
• Investments
• Insurance
• Retirement strategy

Example financial plan

Emma is in her early 20s and wants to become debt-free in the next year.

• $4,650 monthly income
• $4,000 monthly expenses
• $250 monthly contribution to a savings fund
• $250 monthly debt payments ($3000 total debt)
• $0 assets
• $0 investments
• $100 monthly insurance fees
• $50 retirement savings

By reviewing her expenses, Emma has realized that she can save $250 a month by cutting out takeout coffees, eating out, and swapping to a lower-cost grocery store. This means that she can achieve her debt-free goal in 6 months instead of 12 while still contributing to her savings!

Is a financial plan the same as a budget?

No, a financial plan and a budget are two very different things.

Knowing how to create a financial plan is a tool for managing long-term finances (5, 10 or 20 years), whereas a budget organizes your money in the short term, usually on a weekly or monthly basis.

What they both have in common is the need to be regularly reviewed and updated to make them as effective as possible. A money plan and better budgeting complement each other, so use both to truly take control of your finances, both now and in the future.

Personal financial terms like financial planning and budgeting can be confusing, especially if you read conflicting information in the media. But it’s important to know their correct meanings so you can use them the right way.

What is a full financial plan?

A full financial plan is a detailed breakdown of your current situation, goals, and the step-by-step actions to achieve them. Its purpose is to help you understand your circumstances, which is the first step everyone needs to take before making positive changes.

Your plan should be a physical document so everything is written down. Depending on your preferences, it can be a hard copy or an electronic copy. The important thing is to have your money objectives in one document rather than separated into many different files.

The easiest way to get started is to gather information from all your financial accounts into one document.

When building your plan, remember to customize it to your unique finances and personal needs. There’s nothing wrong with using an example to get you started, but it needs to reflect your life accurately so it can help you plan ahead.

For example, don’t overlook the odd cash withdrawal for a soda. Instead, factor it into your full money plan because it could help you highlight areas of unnecessary spending!

Articles related to planning your finances

If you found this information about money organization and planning helpful, these other posts offer more ideas!

• How To Create A Strategic Financial Planning Process For Yourself
• Example Of A Financial Plan To Help You Create Yours
• How To Create A 5-Year Plan For Financial Success
• How To Create A Financially Sound Plan For Yourself!

Create a solid financial plan and it will help you become financially successful

Learning how to make a financial plan customized to your goals can help you attain them! Remember, this is your journey, not anyone else’s, so having a plan to succeed with your finances is super important.

I completely believe that planning ahead for the life you desire is 100% worth it. As you create a system that works and learn how to manage your money, feel free to leverage our free financial courses!

The post 12 Steps To Creating A Solid Financial Plan For Yourself appeared first on Clever Girl Finance.

One of the common ways to manage multiple credit cards and pay off debt quickly is by doing a credit card balance transfer. Are you wondering, “How do balance transfers on credit cards work?” or “What is a balance transfer?” Find out more here!

How do credit card balance transfers work? A balance transfer is when you move your balances from one or multiple credit cards to another card.

The new card offers a much lower interest rate, usually for a fixed period. Typically, you’ll find balance transfer offers advertised at a 0% introductory interest rate.

So, how do balance transfers on credit cards work to help you pay off debt? Well, a balance transfer can help you with saving money interest-free while paying off your credit card debt.

But it’s also a huge trap people fall into! This is because credit card companies offer balance transfers and the associated incentives as a way to make money.

How do balance transfers on credit cards work with credit card companies?

Balance transfers seem like one of the advantages of using credit, right?

However, some people may not pay off their transfer balances before their introductory rate expires. That allows the credit card companies to charge interest based on the agreement you made with them.

This is because, after the introductory period, the interest rate on your balances can be much higher than the 0% you paid before. These details can be pretty easy to glaze over.

The psychology of credit card balance transfers

The biggest reason people may not pay off even the best balance transfer credit cards? Because they get comfortable seeing the “new” lower interest rate, and they think they now have more time to pay.

I can’t tell you how many people I’ve spoken to who slow down on their debt repayment because they think a balance transfer is saving them money. Yes, you might have a lower interest rate but it’s still compounding on your debt. This means even though your interest rate is lower, if you slow down paying your debt or extend the time to pay it, you might actually not be saving anything in the long run!

In addition, many people end up increasing their balances through new spending. They think that, now that they’ve reduced their interest, the debt will be much easier to pay off.

How to do a credit card balance transfer the right way

It’s important to know the details of the card you are considering and how to transfer your balance correctly. Check out how to do a transfer!

1. Create a payoff plan

What is a balance transfer good for if it doesn’t help you pay off debt?

In other words, you need to make sure you can pay off your balance in full before the introductory period expires. Have you calculated how much you’d need for your monthly payments to pay off your balance in full by the expiration date?

You may run your calculations and find that you can’t pay your balance off in full before the introductory period ends. It might actually cost you more money in the long term if you make that balance transfer.

Create a debt reduction strategy and payoff plan to ensure you know exactly how much money you need and how long it will take to pay off your balance. Also, keep in mind that you usually can’t use a balance transfer to pay off your student loans.

2. Be aware of the balance transfer fees

Another question to consider is, “How do credit card balance transfers work as far as fees?” Many balance transfer agreements require you to pay a percentage of your balance as a processing fee. It will usually be anywhere from 3% – 5%.

So it’s important to ask yourself whether the fee is worthwhile (will you still save money?). If you choose to do a balance transfer, look for a card with no fees for the transfer and no annual fees.

In addition, in my opinion, it should have a 0% introductory period of at least 12 months (in which time you can work to pay off your balance).

3. Check your credit score before you apply

The most important thing to do before applying for a new card is to check your credit score and credit report. To qualify for the 0% annual percentage rate (APR), you will need to have a good or an excellent credit score. Otherwise, you may get declined.

Checking your credit score first will save you from applying for no reason. Improving your credit score can help you qualify for loans with better interest rates, saving you a lot of money!

4. Request a credit card transfer

Once you’ve decided that you want to go ahead with the credit transfers, you’ll need to send in an application to the credit card issuers. Often, a new credit card application will include the transfer request as an option.

You can also do this online or on the phone.

Before making any changes, read the fine print with the new card you are applying for.

5. Wait for the transfer to complete

Once you’ve submitted your application and requested a balance transfer, you’ll need to wait for the operation to complete. The time it takes for the balance to transfer will depend on the credit card company. Don’t forget to continue paying your balances in the meantime.

In most cases, it takes five to seven business days, but it can take several weeks to complete.

6. Do not continue to charge purchases

Just because your new credit card has a 0% APR doesn’t mean it’s time to hit the mall. Charging up purchases only adds to your debt, so it’s important to stop buying. It can also prevent you from paying off the balance before the introductory rate matures.

What is a balance transfer good for if you add more debt to your cards? Use this card for exactly what it’s for—to save you money on high interest and get out of debt for good!

Expert tip: Beware of interest rates

Balance transfers on credit cards work by offering promotional interest rates. When applying for a balance transfer, carefully consider the duration of any promotional interest rates offered.

While a 0% APR offer is enticing, I suggest having a plan in place to pay off the balance before the promotional period expires.

By creating a realistic repayment schedule and sticking to it, you can take full advantage of the promotional rate without getting caught off guard by higher interest charges once the promotional period ends.

Remember, the point of a balance transfer is to lower your debt, not get into more debt!

Alternatives to a credit card balance transfer

If you’ve decided a balance transfer isn’t financially beneficial, or you can’t qualify for a 0% APR, there are alternatives to a credit card balance transfer.

Pay off your balance in full on your current card

Remember, the credit card companies are not doing you any favors! Offering balance transfers is a strategy they use to make the maximum amount of money possible on interest. And for the most part, they always win.

If you feel like doing a balance transfer will be more trouble than it’s worth, don’t do it. The short-term gratification of a 0% interest rate that will inevitably lead to you paying more interest over time is not worth it if you won’t be paying off your balance in full before that 0% interest rate is gone.

The surest way to win is to buckle down and figure out the best way to get out of debt as aggressively and quickly as possible.

Clever Girl Tip:

If you choose to do a balance transfer, don’t run up new debt on your old or new credit card. Remember, the whole point of doing the balance transfer is to save money on interest payments. By doing this, you can pay your balance off faster.

Also, ensure you don’t miss any payments or pay late, as this could void your 0% interest rate. At least make your minimum payment, or try to pay off as much as possible each month.

Ask for a lower rate

Depending on your credit and relationship with your cardholder, you may be able to get a lower rate. They may be offering a promotional rate as well. It never hurts to ask.

Call your card issuer and ask if you qualify for a reduced rate based on your credit history and relationship.

Apply for a personal loan

You may wonder, “Should I do a balance transfer or apply for a personal loan?” People opt for a personal loan to consolidate their credit card debt because they will have a fixed rate for the life of the loan rather than trying to pay it off before the promo rate matures.

This is a good option only if the rate is lower than the rate of your current card.

For instance, if your credit card rate is 23.99% and you qualify for a personal loan with a rate of 7.99%, then it would make sense to consolidate your debt. It could save you quite a bit of money in interest if you do it right.

Remember, you still need good credit to qualify for an unsecured loan. And you still want to consider all the fees involved to make sure the new rate really makes sense for you.

Some people opt for a secured loan, such as a home equity loan, to pay off credit card debt.

However, I advise that you try other avenues to prevent risking your home as collateral.

Should I do a balance transfer?

You should only do a balance transfer if it benefits you financially i.e. it will save you money, not cost you more. That’s why it’s essential to create a debt payoff plan and know the balance transfer cost.

One other benefit of a balance transfer is it may simplify your finances by allowing you to bundle all of your payments into one.

Again, you only want to transfer your balance if you can pay it off before the rate increases. Otherwise, it’s best to get rid of debt with another method.

Will a balance transfer hurt my credit score?

A balance transfer to an existing line of credit won’t hurt your credit score, but if you apply for a new line of credit, it could impact your score.

In general, you should use a balance transfer to reduce your debt, which in turn could increase your score by reducing your credit utilization ratio.

The lower your utilization ratio (your credit limit relative to your debt), the better it is for your credit score. That’s because your ratio makes up 30% of your credit score.

Is it a good idea to do credit card balance transfers?

A credit card balance transfer can be a good idea if you have a lot of high-interest debt and can take advantage of lower rates.

However, it can also worsen the situation by giving you access to even more credit card use. If used effectively, then a balance transfer can help pay off debt.

But use a balance transfer with caution and look for alternatives to get out of, and stay out of, debt.

How does a balance transfer work on a credit card?

When you move a balance from one credit card to another, you generally want to do so to take advantage of a lower interest rate or a promotional offer. When you decide to do a transfer, you send in your application.

Once approved, the issuer will most likely pay off the balance of the old card and then transfer the debt. Then, you’ll have to start paying off your debt on the new card.

What happens to a credit card after a balance transfer?

After a balance transfer, the balance of your old credit card will be paid off, which reduces or eliminates the debt. Your old card will probably remain open.

You can then either keep and use it or close it yourself. If you keep it open, limit any new purchases or try a no spend challenge to not increase your debt further.

What is the downside of a balance transfer?

The downside of a balance transfer is it doesn’t get rid of your debt, it just transfers your debt from one issuer to another. You may also have to pay a balance transfer fee, usually charged as a percentage of the transferred balance.

In addition, any promotional rates offered are usually temporary, and the real rates can be very high. And if your old credit card stays open, you may be tempted to use it again and get further into debt, defeating the whole purpose of a balance transfer.

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You’ll love reading these other posts if you learned more about credit cards and debt payoff from this article!

• Can You Pay A Credit Card With A Credit Card?
• How To Get Out Of Debt On A Low Income
• Should You Use A Home Equity Loan To Pay Off Debt?
• 27 Tips For How To Pay Off Credit Cards Fast

Be cautious with balance transfers

So, how do credit card balance transfers work best for your finances? When they can be paid off within the 0% interest rate promotion.

However, be cautious with balance transfers, no matter how great they sound.

It’s very easy to get sucked into a balance transfer card for rewards and cash back features but then rack up more debt because of the no-interest mentality.

The key is to make it work in your favor! That’s why it is vital you figure out your debt payoff plan before applying for the card. You can pay off your debt with or without transferring your balance by changing your money habits and learning how to use credit cards wisely.

The post How Do Balance Transfers On Credit Cards Work appeared first on Clever Girl Finance.

Starting early with investing for retirement is so important to secure your future self. This means that saving for retirement should be a component of your overall financial portfolio and wealth-building strategy. By starting early on, you put yourself in a position to build a substantial nest egg that the future you will be grateful for. So, let’s discuss how to save for retirement in your 20s!

Why saving for retirement early matters

Saving for retirement early is essential as it can you help you create a solid financial base. This ensures that you’ll have sufficient savings for a comfortable retirement, even if career interruptions happen along the way.

Early savings also means that you are creating financial independence for yourself, lowering your reliance on social benefits and reducing financial strain in retirement.

Unfortunately, 56% of workers feel that they don’t have enough money for retirement, which is why it’s important to get started saving immediately.

But don’t worry, retirement saving isn’t as complicated as it seems! Here, you’ll find answers for everything from “How much should I contribute to my 401k in my 20s?” to “What are my options for saving?”

There are many retirement accounts to choose from when figuring out how to save for retirement in your 20s.

First, of course, you need to pick the right account that aligns with your financial situation and goals. Let’s discuss them below!

1. The 401(k) Plan

A 401(k) is an employer-sponsored retirement account into which you can contribute part of your pre-tax income. Many employers who offer the 401(k) plan will offer a match up to a certain percentage.

For example, a common matching contribution plan matches 50% for annual contributions up to 6%. If you make $100,000 and contribute 6% (or $6,000) to the plan, your employer will contribute an additional $3,000.

The great thing about the 401(k) plan is that you get to save the maximum amount of your income before taxes. But keep in mind that when you retire, your funds will be taxed at whatever your tax bracket is at that time. So, when you calculate retirement, planning for taxes is a must!

In addition to the traditional 401(k), many employers offer a ROTH 401(k) to their employees. Funds contributed to a ROTH account go in post-tax. Post-tax means your savings come out tax-free in retirement.

There are a few other types of employer-sponsored plans as well: 403(b) and 457(b) plans. These plan types are almost identical to the 401(k) plan. They are offered to people who work as educators, in government, or in non-profit organizations.

A personal 401(k) story

A while back, I posted a picture on Instagram of an old 401(k) statement. I started this 401(k) account with a zero balance.

Over a 4-year timeframe, I saved $81,490, which included my 401(k) match. Shortly after I shared that post, someone left this particular comment:

“401(k)s are for chumps. Two-thirds of that money will be gone in taxes, (and) fees that you don’t know about, and that they are legally allowed not to tell you about.

You will be taxed at the rate at which you retire, which will be more than you are today. Inflation will cut that by 2% every year.

It’s a big game and you are falling for it. Why would you put your money in a 401(k) when the banks just print more money?”

I’ll be honest and say that yes, I agree with a portion of their comments, but this person is not right about everything with 401ks. Which brings us to the pros and cons.

Pros and cons of a 401(k)

There are a few cons to a 401(k). Some 401(k)s can be expensive, have hidden fees, and be very limited in terms of where you can invest.

Additionally, 401(k) contributions are before tax. That means when you start to withdraw it, you will be paying tax at whatever your future tax rate is. Future tax rates are hard to predict, but they could very likely be higher than the present day.

However, even though there are a couple of drawbacks of a 401(k), the advantages far outweigh them when planning how to save for retirement in your 20s.

401(k)s are a great way to gain investing experience

Before being exposed to a 401k, many people have never really had the opportunity to invest in the stock market. A 401(k) provides that opportunity and allows it to happen painlessly through automatic deductions from your paycheck.

There is a great opportunity for pre-tax contribution growth

The growth of your pre-tax contributions may far outweigh any taxes or fees you incur when it’s time to withdraw from the account. However, this is not a guarantee.

In addition, the growth from your employer’s 401k matching may be able to take care of some or all of those taxes and management fees you incur.

Retirement is not a specific date; it’s a period of time that lasts for several years

Retirement can last upwards of 20+ years. That means when you retire, you won’t be withdrawing all your money at the same time. Your money still has more time to potentially keep growing.

Your money doesn’t need to stay in your 401(k) forever

Most people do not stay at their jobs from when they first graduate college until they retire. A classic example is me! I switched jobs four times over an eleven-year period before I started working for myself.

When you leave a job, you can roll over your 401(k) money into an individual account. You are not stuck there forever.

2. Traditional IRA

This is a type of retirement account that you can set up individually, independent of an employer.

In addition, this account type is tax-deferred. That means you will have to pay taxes come retirement (age 59 1/2), according to the IRS, when you start to withdraw your money.

Pros and cons of a traditional IRA

The biggest benefit of a traditional account is deferring taxes till retirement. You won’t pay taxes on funds when you put them into the account. As most people have a lower tax bracket after retirement, this means you’ll ultimately pay less in taxes when you withdraw the money later.

Additionally, a traditional account gives you much more flexibility in investing than employer-sponsored plans. Generally, you can invest in almost endless investment options, such as stocks, mutual funds, or bonds.

IRA contribution limits, however, are much lower than 401(k) limits. And if you take out money before you are eligible (age 59 1/2), you will be subject to income tax and a 10% penalty.

3. Roth IRA

This account type is similar to a traditional account but has some key differences.

First, your contributions are made post-tax, which means there is no deferred tax benefit.

In addition, the earnings on your funds will not be taxed come retirement age. You can make withdrawals on your contributions before you are eligible without any tax penalties, according to Charles Schwab.

Pros and cons of a Roth IRA

While a traditional IRA gives you potential tax savings when you contribute funds, a Roth helps you save on taxes in retirement. Money that you put into a Roth goes in post-tax, meaning you’ll pay taxes before depositing it.

However, you get to take your money out of the account tax-free in retirement.

Like a traditional account, Roth accounts also give you the chance to invest according to your risk tolerance.

However, Roths also have lower contribution limits than 401(k) accounts.

In addition, Roth accounts have income limits, so you may not qualify for a Roth if you make too much money.

Traditional or Roth IRA? Which is best?

They are both great ways to grow your retirement funds. But to choose between the two, you have to determine what works best based on what you think your future tax bracket will be.

For example, if you think your future tax bracket will be lower than what you currently pay now, then a traditional account might be best for you since you don’t pay taxes until later.

However, if you think your tax bracket will be higher than what you pay now, then a Roth might be best for you since you would have already paid taxes on your contributions.

Many people have both types of accounts because you can have multiple IRA accounts. Ultimately, they are able to save more by leveraging the benefits of these plans over time.

4. The self-directed IRA

A self-directed IRA is a type of individual retirement account that is governed by the same IRS rules as traditional and Roth accounts.

However, unlike the other types, a self-directed account can unlock access to alternative investments, for example, real estate.

Pros and cons of a self-directed IRA

There are pros and cons to a self-directed IRA, as explained by NerdWallet. The main benefits of a self-directed account include:

• Ability to invest in a range of alternative investments
• Potential for higher returns through diversification

However, self-directed accounts also come with disadvantages, such as:

• Fees may be higher for self-directed accounts
• May have a higher risk of scams or fraud due to less regulation
• Some alternative investments have low liquidity, making it difficult to withdraw funds

5. The Solo 401(k)

This plan is specific to those who are self-employed but have no full-time employees. Essentially, a solo 401(k) lets self-employed people create a 401(k) plan for their business. It can be a great option if you’re self-employed and trying to figure out how to save for retirement in your 20s.

Pros and cons of solo 401(k)

The advantages of a Solo(k) include:

• Many benefits of a traditional 401(k) that self-employed people otherwise wouldn’t get access to
• Business owners can contribute both as an employee and employer, maximizing contributions
• Spouses who get an income from the business can also contribute to the plan
• Higher contribution limits than other common options for the self-employed.

The downsides of a solo 401(k) include:

• Only available for self-employed people
• Added administrative duties for the business owner, such as filing tax forms
• Contribution limits are tied to income, so if your income fluctuates, your contributions could be affected

6. The SEP-IRA (AKA Simplified Employee Pension)

The Simplified Employee Pension allows the self employed and business owners to contribute up to 25% of employee’s earnings to IRAs for their employees up to a certain amount, tax-deferred.

It’s based on employer contributions only, and each eligible employee (if you have them) must receive the same contribution percentage from you as the employer.

Pros and cons of the SEP-IRA

The main benefits of an SEP include:

• Easy to set up and maintain as opposed to a 401(k) plan
• Relatively high contribution limits
• Contributions can be flexible based on the profit of the business
• There are no ongoing tax filing requirements for a SEP plan, the U.S. Department of Labor notes.

The cons of a SEP include:

• No employee contributions
• Employers must contribute to all eligible employees
• There are no catch-up contributions for older employees
• No ROTH option is available for a SEP

Expert tip: Understand your risk tolerance

Your time horizon is the amount of time you will hold an investment. Generally, an investment fund with a later date can take on higher risk than one with a nearer date.

It’s important to decide how risk averse you want to be throughout the years. And if you choose to, it’s okay to make changes if you want to. Knowing your risk tolerance can help you plan for the long term future.

How to save for retirement in your 20s when you’re just starting out

Now that you are familiar with the different types of retirement accounts, it’s time to get started with retirement planning in your 20s!

But what if you’re just starting out and don’t earn much? Whenever the topic of saving for retirement comes up, I am often met with statements similar to the following:

“I don’t earn enough to save for retirement.”

“I’m waiting to get a better job before I start saving.”

“I’ll play catch up when I earn extra income.”

While entering the workforce can be exciting—you’re finally out on your own!—it can also be overwhelming. And if you’ve got an entry-level salary, it can be tempting to skip saving for retirement.

However, there are plenty of ways to save for retirement while dealing with an income that’s lower than you plan to make in the long run.

1. How to start saving for retirement with the right investments

The first step to saving for retirement is finding the right accounts and simply getting started. Many jobs offer employer-sponsored retirement accounts like a 401(k). You can also save for retirement through non-employer accounts like an individual retirement account.

The investments you choose will generally depend on your personal risk tolerance.

However, most financial experts agree that you can be more aggressive with your investments in your 20s because you’ll have more time for market corrections. That means it could be worthwhile to invest in riskier vessels, such as individual stocks, over lower-risk investments, like investing with index funds.

Still, it’s a good idea to diversify your accounts as well—meaning you shouldn’t put all of your savings into one type of investment.

Although you might be earning a starting salary, you can start by contributing as little as 1% of your salary to your savings. Then, make 1% increments for each raise you receive.

Even though it’s a small amount—you probably won’t notice much of a difference in your paycheck— you’ll be saving a substantial amount of money over the years.

2. Get the free money from your employer

What types of retirement options does your employer offer? When you take a job, your human resources department typically provides information on plan options. Many employers offer a 401(k) or 403(b) plan for employees.

Be sure to ask your employer about potential retirement options to see what they offer.

If your employer offers a 401(k) or 403(b) savings match, take it. So many people do not take advantage of their employer-sponsored match.

That’s a big mistake because you essentially get free money! If you are just getting started with saving for retirement, you can set an initial goal to contribute just enough money to get the match.

3. Leverage other options

If you don’t have access to a 401(k) plan through your employer, then consider 401(k) alternatives. They include setting up a traditional and/or Roth IRA through your bank or via a brokerage firm.

The saving maximums are lower than a 401(k) or 403(b), but you can still save a lot of money over time.

In addition, if you’re learning how to save for retirement in your 20s, you’ll likely also need to learn how to save for other expenses.

Starting an emergency fund stored in a savings account is an important aspect of a healthy financial plan as well. It helps you cover the unexpected costs that could come up in life—from a broken-down car to sudden medical bills.

4. Automate your savings

After you’ve calculated your retirement lifestyle needs, you should make saving easier by automating your finances. How?

Have funds automatically taken from your paycheck directly into your account. 401(k) and 403(b) deposits are usually automatically pulled from your paycheck.

However, if, for some reason, your deposits are not automated, make a payroll request to make it happen.

Automatic transfers take the stress out of saving. And you’ll never forget to make a transfer again! Plus, you won’t get the chance to overthink whether or not you should make the transfer.

Have an inconsistent income? Just not ready to automate? Then, set reminders on your phone around each pay period, reminding you to make those transfers to your retirement accounts!

Putting off retirement contributions until you make more money? Not a great idea when learning how to save for retirement in your 20s.

Doing so basically means that you could have to work longer than you expected in your old age and/or have to rely on government assistance to survive.

By putting it off, you lose valuable time to take advantage of the power of compounding— the key to growing your money over time. So, if you’re wondering what to do with savings, start with what you can save now, no matter how small it might be.

How much should I contribute to my 401(k) in my 20s?

A key consideration to make is to determine how much you need to save before retiring from work.

The easiest way to calculate retirement numbers is to use calculators. Here are a few of our favorite calculators to get you started:

• Bankrate calculator
• Vanguard calculator
• Smart Asset calculator

Here’s what happens when you take money out of your retirement account

I’ve seen so many instances where people think of their retirement as their emergency cash or as savings for their short-term goals.

They feel they can leverage the money for minor emergencies, non-emergencies, and other financial obligations or goals they have.

But is this okay? My thoughts? It really isn’t a good idea unless it’s a dire emergency.

Withdrawing or loaning money from your retirement fund can have adverse effects on your wealth-building efforts for several reasons.

You will lose the potential longer term gains/earnings you would get if your money remained invested and was working for you. You will also lose out on earning compounding interest when you take money out of your accounts.

Additionally, if you withdraw your money before your eligible retirement age, you may be liable to pay income taxes as well as an additional penalty (10%) on the total amount withdrawn.

What does this look like in actual numbers?

Withdrawing money from retirement

Let’s say that right now; you are considering taking $1,000 out of your retirement accounts. Let’s also assume that the average return on your investment for the next year is ~8%.

At the end of that year, you’d have $1,080 in your account. Another year into the future, based on annual compounding with a return of 8%, you’d have more than $1,160 in 2 years from an original investment of $1,000.

Impact of an early withdrawal

If you decide to take this $1,000 out early, you’d have to pay the following (assuming a 30% tax rate):

1. Early withdrawal penalty – 10% = $100
2. Federal & state tax withholding = $300

The balance you would receive would only be $600.00

Taking a loan from your retirement savings

If you decide to take out a loan, depending on the timeframe of your loans, your $1,000 will miss out on the potential earnings and compounding. As with any loan, you’ll have to pay interest on the balance.

And like many people who borrow from their retirement accounts, you might have to reduce or stop your retirement contributions altogether to be able to make the loan repayments. So, the lost opportunity is even greater.

However, if you left that money alone for 10 years, the potential future value of your $1,000 could be $2,159. A scenario like this assumes an average return of 8% over that 10 years (based on the historical performance of the stock market over time). Since this is an average return, it would be despite spikes and dips in the stock market.

$600 vs. $2159. The difference is major.

And this is only based on $1,000.

If it was based on $10,000, it would be a difference of $6,000 vs. $21,589.

Yup, let that sink in.

How to avoid withdrawing money early

It’s important to avoid dipping into your savings. Here are a couple of tips to help you build a better budget for emergencies and other expenses.

Build up your emergency savings

To start, it’s important to focus on building a solid emergency fund. Your goal should be 3 to 6 months, but more is better, such as a 12-month emergency fund. That way, if you need some extra cash due to an unexpected occurrence, you can leverage your emergency savings instead of your retirement money.

Don’t have an emergency fund in place yet? Set an initial goal to get to $1,000 or more ASAP. Then, after paying off any high-interest debt—like credit card debt—ramp up your emergency savings to 3 to 6 months of basic living expenses.

Start saving for your short to mid-term goals

Next, create savings for your short to mid-term goals. It’s basically the money you need to have access to in less than 5 years, like buying a house, taking a trip, or buying a car.

Building these saving goals into your monthly expenses list will help ensure you are allocating funds toward them each paycheck. Over time, you’ll be surprised at the progress you make.

Should I roll over my old 401k to my new employer’s plan?

Yes, when it comes to what to do with your old 401k, you can roll it over from one employer to another if permitted by your new employer.

But it’s important to keep in mind that, in many instances, employer-sponsored plans can be limited in terms of the options you can invest in.

If you are moving jobs, it’s better to move your retirement funds into your own account with a brokerage firm like Betterment, Vanguard, or Fidelity. There, you have access to the entire stock market and potentially much lower fees. I’m a huge fan of index funds because I know exactly what I’m paying in fees.

How much should you be saving for retirement in your 20s?

The easiest way to determine how much to save for retirement at this age is to simply save what you can.

Many people at this age are in the early stages of their career—and adult life. So, you might not have as much money to put toward retirement as you will when you establish yourself in the world.

Hopefully, you’ll be able to at least build an emergency fund and meet your employer’s 401(k) match if you have one.

However, if you have a lot of high-interest debt, such as from credit cards, you should focus on learning how to stop paying credit card debt by paying it off.

Additionally, start saving some money for retirement.

How do I start putting money away for retirement?

The first place to start is to look at savings options from your employer. A 401(k), for example, is an employer-sponsored account that generally automatically contributes money to your account from your paycheck. All you need to do is sign a few forms through your human resources department.

If you don’t have access to an employer-sponsored account, you can look into individual retirement account options. And you may choose to open an IRA in addition to your workplace 401(k).

To open an account, you’ll have to reach out to a bank, brokerage firm, or financial advisor.

How much should I contribute to my 401k in my 20s?

I suggest starting with a retirement calculator to get a general idea of what you might need to meet your lifestyle in retirement. Then, you can break down how much you need to contribute to reach that goal.

Remember, retirement isn’t a short time period. Most people in the U.S. retire in their 60s, according to Madison Trust Company. And from there, you may be in retirement for 20 years or much longer.

The unknowns make it difficult to know how much you should contribute to your 401(k).

However, it’s worth noting that the longer your money is invested, the more time it has to grow. So, contribute what you can and take advantage of things like employer matches.

Articles related to preparing for retirement

If you want to learn even more about how to start saving for retirement, read these posts now!

• Retirement Savings: Everything You Need to Know
• Roth vs traditional 401k: Is The Roth Better?
• What is the Difference Between A 401k And IRA?
• How To Save For Retirement In Your 40s And 50s: 11 Key Tips

Retirement planning in your 20s: Start saving now!

Don’t ever let ANYONE make you feel stupid for making smart money decisions. Do your research, determine your investment objectives, have a plan that you adjust as necessary, and stay the course when it comes to pursuing your financial goals.

If I didn’t know anything and was just starting out with my 401(k), people complaining about high fees and limited investment options might have stopped me from investing in the account. Based on their misguided advice, I could very well have invested nothing, gotten no free match, and lost out on the chance to build additional wealth by investing in my 401(k).

Don’t let that happen to you! Save early—even if it’s not much—so you’re better prepared for retirement. If you start building wealth in your 20s, you’ll be in a great place financially when you retire.

The post How To Save For Retirement In Your 20s appeared first on Clever Girl Finance.

You’re likely reading this article because you’re interested in the differences between the way poor vs rich people think and act. You’d probably like to apply the habits of the rich in your own life, right? Well, one thing stands out – it starts with a rich mindset.

If you’re serious about becoming successful, then you need to understand the difference between rich and poor mentality. As you study the lives of wealthy people, you’ll notice one consistent theme: a growth mindset.

One of my favorite quotes of all time is from Dale Carnegie. “Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.”

Having a rich mindset is ultimately about self-growth and persevering until you reach your desired outcome. The best place to begin? Understanding the rich vs poor mindset.

Ready to learn what sets apart the rich mindset vs poor mindset? Let’s dive in!

The difference between rich and poor mentality

If you’ve spent any time on social media such as Instagram, Facebook, and YouTube, you’ve no doubt seen people posting content about their incredibly lavish lifestyles. For some, the images are real. But for others, behind the scenes, there’s a lot of debt, poor credit, and zero savings.

In the extremely popular and captivating book The Millionaire Next Door, authors Thomas J. Stanley and William D. Danko studied millionaires over several decades. Do you know what they found? Most millionaires aren’t living out in Hollywood. 

Most millionaires are right in front of you – living in your neighborhood, driving that second-hand Toyota, and sporting the iPhone from 5 years ago.

There are so many lessons to learn from everyday millionaires. They’re business owners who’ve built their empires from the ground up, women and men who’ve maintained their old lifestyles while building real assets and using a rich mindset.

It’s important to realize that the truly rich often won’t flaunt it.

Additionally, it’s partly why they continue to increase in wealth. They’re not giving into consumption by buying the latest gadgets or the most expensive items. Instead, they’re building assets.

This is a key differentiator between rich vs poor people. Living in luxury can be one of the habits of the poor mindset.

But becoming rich is possible with the right mindset, and there are many more wealthy people out there than you might imagine. These are people who have built wealth quietly using a stealth wealth approach.

What is a poor mindset?

On the other end of the spectrum, you have a significant number of people stuck in a poverty mindset. Poverty and being poor are complex. The environment, exposure, and life experiences can keep someone trapped in this poverty mentality.

It can be difficult to overcome this.

However, you can carve your way out by deciding to adjust your thinking with the power of mindset. So, what are the thought patterns that can hold you back from becoming wealthy?

A poor mindset believes things will not change

Poor mindset convinces people that their circumstances are fixed and that living paycheck to paycheck is the best they can do. They have a lot of negativity and think that there’s not much they can do to improve their circumstances. It’s a big difference between rich and poor mentality.

An attitude of poverty believes overcoming challenges is impossible

Someone using habits of the poor mindset believes that what life has thrown them has never been seen before and their challenges are impossible to overcome. This way of thinking may also cause them to feel judgment towards those that are rich.

What this person fails to realize is that everyone goes through rough patches. Oprah didn’t rise to where she is without facing major personal and professional challenges.

Instead, she has a wealth mentality. Below, we’ll walk through certain habits that wealthy people have that set them apart from the rest.

13 Rich mindset habits to start emulating now

Now that you know the difference between the rich vs poor mindset, let’s get into specific rich mindset habits that you can start working on today.

1. Rich people always have a vision

Before you hit the ground running, ask yourself this: what is your vision? Jonathan Swift said it right when he said, “Vision is the art of seeing what is invisible to others.”

Do you have hopes and dreams you’re constantly thinking of achieving? Is your vision big beyond what you think you are capable of today? Will what you see for yourself change your life, the life of your family, or your community in the future?

If all you see is where you are today, challenge yourself to build a vision. Once you do, realize it’s not a one-and-done affair.

Instead, it’s an everyday process where your mind dreams further of what’s possible, and then you follow your dreams. The rich are persistent and keep working towards their vision and goals; a huge difference between the rich mindset vs poor mindset.

2. Rich people have productive routines

Netflix, YouTube, and TikTok have been dominating the entertainment scene of late. Millions of hours are viewed each day. While it’s great for them, it does little for you – and the wealthy know this. Most rich people are more productive with their time.

People with money are intentional. They have routines. And they understand that you don’t just wake up as a diligent individual out of nowhere.

When we talk about routines, we don’t just mean waking up at 5 am every day. That’s only a tiny part of it.

Instead, we’re referring to the overall environment the wealthy put themselves in.

Rich people are intentional about the friends they keep. They pay attention to what they feed their minds. And they put themselves in environments where success is most likely.

Routines consist of all these components – time, environment, and habits.

For example, when you need to work from home, do you stay in bed? You probably end up getting much less done. Having a designated workspace will get you much further ahead.

Basically, create a life that makes success inevitable and eliminates obstacles that could stop you from achieving your goals. The reliability of a routine can help you succeed. The wealthy know this and are intentional about having a consistent billion dollar morning routine.

3. A rich mindset is results-driven

Rich people focus on outcomes. They take full responsibility by setting goals and achieving them.

In addition, they aren’t building routines for bragging rights. No one is waking up at 5 am, so they can post about it on Instagram.

No. People with money are focused on the results and will commit to doing what it takes to achieve them.

Routines alone will improve your quality of life. But they won’t do anything for your bank account. Routines coupled with focused action will yield results.

So, what’s the best way to achieve results? Know what you want. When you have a clear idea of what the end goal is, it will be so much easier to work back and figure out what it takes to get there!

4. Rich people admit when they don’t know

Guess what makes you a smart person? Admitting what you don’t know and knowing how to ask meaningful questions.

The rich know this and are on a constant search for knowledge as part of their rich mindset. So, if you’re learning from a mentor, ask smart questions for informational purposes.

Learn in regards to the challenges they are facing, understand what they are trying to achieve, how they are planning to achieve their goals, and what they’ve learned from past experiences.

Listening always pays off. Gather intel on best practices, new opportunities, and potential challenges and solutions. Use this skill when learning, negotiating, exploring, or networking – basically every human interaction you have!

5. People with a rich mindset don’t work for money

You heard that right. The wealthy work to learn. Poor people often work for their next paycheck.

Reasons for working is a huge difference in the rich vs poor mindset.

You see it all around you. Poor people end up working from paycheck to paycheck, barely making ends meet. Rich people, in the meantime, grow their skills and abilities and continually rise up the ranks.

6. Rich people have mentors

Life is all about relationships. You’ve heard the saying before, “Your network is your net worth.” It’s true.

But that doesn’t mean you should go out there and dump your friends. Instead, it means you should broaden your circle.

Once you make money the end goal, you’ll be stuck working for it without growing in your talents and abilities to boost your income.

However, if you work to learn, you’ll be well on your way to success.

You see, those with wealth connect with other people. They identify stars in their field, study them, and through a leap of faith, make that connection.

It all goes back to your vision.

Who inspires you? What do you admire about them? What do you hope to learn from them?

And it doesn’t just stop there. A rich mindset asks how you’ll make a connection with that person. To connect with anyone you’d like in the world, you have to serve them first.

Understand their world and figure out how you can add value to them. They’ll be much more receptive to mentoring you once you’ve built a relationship.

7. Rich people always look out for opportunities

Shark Tank is a fascinating show. Every week, handfuls of entrepreneurs stand before the sharks and pitch a new idea. Some of them are wild.

Would you ever imagine a sponge in the shape of a smiley face making millions of dollars? Or a toilet stool that makes bowel movements easier, revamping how people handle their business? Scrub Daddy and Squatty Potty did just that.

Their founders were visionaries who saw opportunities in the mundane day-to-day activities of life.

Not seeking to improve things is one of the habits of the poor mindset. But not someone with a rich mindset.

A rich person always seeks to improve upon what’s out there – and there’s always room for improvement. Both in good economies and bad.

Past recessions birthed companies like Airbnb, Venmo, and Uber. Recessions and times of economic uncertainty create some of the greatest comeback stories you can ever imagine. It’s times like these where differences between people with rich vs poor mindsets stand out.

8. Rich people believe in abundance

In the rich vs poor mindset, there’s often one core belief that holds poor people back. It’s a belief that resources are limited, also called a scarcity mindset. It’s a belief that if my neighbor Jane succeeds, then there’s less room for me to succeed.

It can often lead to resentment and an assumption that rich people only look out for their own interests. To a person with a poor mindset, resources are always scarce.

People with money, on the other hand, believe in abundance.

You’ve succeeded? Great! Who else can, too?

Wealthy people know there’s plenty to go around. They do not engage in an “us vs. them” mentality. They focus on providing as much value as they can to as many people as they can. That’s their formula for success.

Zig Ziglar summarized it well when he said, “You can have everything in life you want if you will just help other people get what they want.”

9. A person with a rich mindset learns how to manage their finances

No one is born knowing how to manage their money. Sure, some people are born into families where good money habits are modeled well for them. But for the majority of us, that’s not the case.

Rich people know this and are proactive in managing their finances. A rich person has a budget.

A wealthy person has learned how to invest in the stock market. A successful person made it a priority to get out of debt.

Beyond that, the rich understand how to use money to their advantage. Instead of racking up thousands of dollars in consumer debt, rich people will leverage it to start a business if they need to. They use debt to build, and they pay it off responsibly.

10. Rich people are not afraid to fail

Rich people are not afraid to fail because they know failure leads to success. They’re not afraid of trying something new. They see a problem, and they are quick to think of solutions to it.

No one has 100% accuracy with finance and investments. Sometimes, you just have to take a calculated risk.

Failure and setbacks don’t worry them because they have not failed as long as there are life lessons to learn. They are willing to go out on a limb sometimes, at their own risk, because they want to improve and try to be more successful.

You’ve certainly achieved wins in the past, but you’ve probably also had things not go according to plan before those wins. Look back at each of them, and you’ll notice the lessons you learned in order for you to get to the point of success.

11. Rich people focus on the long-term

There are two different perspectives in life: those who focus on what’s in front of them and those who think about the big picture.

People with a rich mindset don’t just think about what’s going to happen tomorrow or even over the next year. They think about what is going to happen in the next 20 or 30 years. The rich realize that things take time, including building generational wealth.

For example, a rich person knows that forgoing the latest smartphone model and instead investing that money in a retirement account will be better for them in the long run. Sure, that money might be off-limits until they hit 59-and-a-half. But they know that even if it’s not accessible right now, it’s helping them build long-term wealth.

And thanks to earning compound interest, the longer they wait, the more money they’ll have in the end.

12. The rich take care of their health

People with a rich mindset have a different way of thinking when it comes to things like health and taking care of themselves. They know that while working hard will pay off in the end, it won’t if it’s at the cost of their health.

That’s why rich people make sure to prioritize living a healthy lifestyle. That means eating healthy, exercising, and regularly going to the doctor. But it also means focusing on mental health.

If you have a negative mindset and are struggling with your psychological health, it can be difficult to focus on other things like making money and building money habits. So, focusing on a positive way of thinking and mental health can help you succeed.

13. Rich people understand the value of investing

Another one of the differences is that rich people understand the value of investing. Putting aside money into an IRA or some sort of retirement savings every year might not seem like the most exciting use of your money, but it can be one of the keys to building wealth.

How? When you invest money, whether it’s in the stock market, real estate, or another type of investment account, you’re making a long-term bet that your money will grow in value over time.

People with a wealthy mindset understand that investing can pay off, especially if you start investing at a young age. That’s because the longer you invest, the more time your money has to compound and earn you even more cash.

Expert tip: You can change your perspective

If you want to start building wealth, you need to develop a rich mindset. By focusing on how you approach and think about things, you can turn your perspective around from being negative to positive.

Instead of thinking about what you can’t do or why you can’t increase your savings, think about the things you can do today. Use the resources you have available to you and start building the right habits and your mind will change.

How do you go from a poor mindset to a rich mindset?

If you want to go from a poor mindset to a rich mindset, focus on improving yourself and how you think about things.

For example, practice gratitude with a daily gratitude list, meditate, and surround yourself with people who are positive. Make sure to set clear goals and gain as much knowledge as possible.

What is the difference between a broke mentality and a poor mentality?

A poor mentality is a mindset where you believe that opportunities are limited and that money should never be spent. In addition, you believe you shouldn’t take risks, and if you do have success, it’s temporary.

A broke mindset is when you don’t know what’s important to focus on when it comes to money. You might spend your paycheck on the consumption of things you don’t need, then complain that you are not able to save or invest.

Both of these mindsets can be changed, and you can begin to think positively about your life and finances.

How do you know if you have a rich mindset?

If you think that being wealthy is possible and are focused on building value over the long term, then you may have a rich mindset.

Likewise, if you find yourself already practicing investing, managing your money, and recognizing opportunities, then you likely are on the path to having the right mindset to build wealth.

Articles related to having a rich mentality

If you want to know more about how to change your mindset and become wealthy, check out these posts next!

• How To Get Rich From Nothing!
• Rich VS Wealthy: 3 Key Differences Between The Two
• How To Stop Being Poor: Breaking The Cycle Of Poverty
• 11 Key Ways To Improve Your Money Mindset

Develop your rich mindset to become wealthy!

Now you know the difference between rich and poor mentality. Becoming rich is not hard, but it does take time and effort.

You just need to start cultivating habits that will get you there and understand a rich mindset vs poor mindset. Practice habits that will make you wealthy, not habits of the poor mindset.

Like many before you, you too can become a millionaire. It won’t happen overnight, but with consistent and diligent effort and a good mindset, you’ll be well on your way to achieving wealth.

So, I’ll leave you with these questions: What is your vision? Where are you going? Who do you want to be? 

Today is a great time to start developing your rich mindset and working towards your goals.

To learn new things about habits and finance, listen to our podcast, Clever Girls Know. Or check out these financial books for even more information about money.

The post Rich Mindset Vs Poor Mindset: How To Develop A Rich Mindset! appeared first on Clever Girl Finance.

The word frugal is often misconstrued into a negative one. However, although a frugal lifestyle can seem like a sacrifice in quality, it doesn’t have to be. Instead, you can choose to try frugal living tips that will add more value to your life.

So, let’s dive into what it means to be frugal as well as out my top frugal living tips to get you started!

What is frugal living?

Frugal living is the act of being very intentional with your spending. If done properly, you’ll be able to start prioritizing yourself and your family and, ultimately, what matters most to you.

I’m a huge fan of this approach to living because I can prioritize spending money on those things that matter the most to me and cut back on my budget in other areas.

That said, how to live frugally can mean very different things to different people.

Frugality does not need to mean trading your favorite cereal for a generic store brand. It does not need to mean living without napkins. And it does not need to mean forgoing adventurous vacations in favor of staycation ideas.

The best part about frugality is that you are able to create your own approach. You decide where you will be living stingy with certain aspects of your budget and where you will live largely.

37 Frugal living tips

Here are some frugal living tips and strategies to help you get started on this new path!

1. Start budgeting

Creating and sticking to a budget is fundamental to your financial success.

Although budgeting isn’t necessarily fun, it is a critical piece of the puzzle. Within your budget, you can prioritize things that matter and ruthlessly cut out things that don’t.

Keep in mind that there’s nothing wrong with occasionally splurging on the things you like. Just make sure you’re saving for these purchases in advance. So if you want to take a particular trip with friends or buy a nice bag or pair of shoes, start putting aside the money for it.

Luckily, there are many strategies to help you find budgeting success and understand how to be frugal. Learn more about creating a budget that works here.

2. Meal plan

If you are anything like me, then meal planning doesn’t sound enjoyable. A combination of kitchen fears and laziness led to a lack of meal planning that was burning a hole in my budget.

When I took the plunge and started budget meal planning, I was pleasantly surprised at the savings. Instead of ordering lunch every day, I just eat what I’ve cooked at home.

The savings of $10 to $20 a day really add up quickly. Check out our 30-day meal planning challenge to find some inspiration.

3. Cook in bulk

In a similar vein, summoning the energy to cook dinner after a long day at work can be next to impossible. Unfortunately, I typically resorted to fast food, which only hurt my budget and my waistline.

However, cooking in bulk has completely changed my dinner routine. Now, I cook in bulk based on what’s on sale that week or discounts I can find. I typically cook on Sunday afternoons and have enough to freeze several portions.

During the week, I simply take those meals out of the freezer and heat them up. My budget and my waistline have thanked me.

How much could you save with a little bit of time in the kitchen? You might even find that you actually enjoy cooking when you don’t have to do it every single day. here are some great ideas for frugal meals!

4. Take a look in your pantry

The amount of food I keep in my pantry at one time is somewhat embarrassing. But most people have a similar amount of food lurking in their cabinets.

Take stock of what you have on hand. Consider making a meal out of what’s in the pantry or fridge rather than grocery shopping.

Recently, I’ve been eliminating one weekly trip to the grocery store each month. The goal of that week is to finish all of the leftover ingredients lying around my kitchen using various recipes. You might be surprised by your creativity in the kitchen.

5. Check out coupons

Grocery shopping on a budget can be expensive, even if you buy items in bulk. 

Take advantage of the best coupon websites, and believe me, if you look, you’ll find them. You might be able to save a few dollars on each trip to the store. Those savings can add up quickly and turn out to be one of the best frugal living tips!

6. Sell things you don’t need

Most of us are guilty of having a bit of extra clutter lying around the house.

Whether you have amassed an oversized collection of designer handbags, have a ton of items your kids have outgrown, have too many dishes, or have an overflowing bookshelf, it might be time to downsize.

That clutter could be turned into cash with a little bit of effort. A few places to start selling include Facebook Marketplace, eBay, and Poshmark.

7. Buy used

When you have the option to buy something used, do it. You can save a significant amount of money with lightly used items.

Check around your local thrift stores, garage sales, and online marketplaces to find the item you need at a much better price. Not buying at full price is one of the best ideas for how to live frugally.

8. Return things you don’t need

Take a look at your recent purchases. Is there anything that you absolutely don’t need? Make a trip back to the store or ship that item back and get your money back.

You can even return groceries.

Yup! You read that right. Grocery stores will take back spoiled food and non-perishable items.

9. Repurpose the fabulous clothes you already have

Do you love to shop? Do you consider having nice clothes and shoes a part of your fabulosity profile? If so, you probably already have a closet full of items that you hardly wear.

Instead of going out to buy another pair of shoes or a shirt that you’ll only wear once and forget, consider shopping in your closet.

There’s probably a bunch of clothes and shoes lost in the back of your closet, begging to be worn again. Organize your closet so that you can find some of these hidden treasures.

Learn to repurpose the fabulous clothes you already have before spending unnecessary money on things you don’t need. You can be fashionable on a budget!

10. Buy a car you can afford

A car is a major expense. 

In fact, it is one of the largest purchases you will make in your life. With that, it is critically important to buy a car you can afford using frugal living tips.

Don’t let the bells and whistles of a shiny car steer you wrong. Instead, ask yourself, “What car should I buy?” and determine what you can really afford before you head to the dealer.

11. Walk or bike when you can

Although having an affordable car is great, walking and biking are much more cost-effective for living frugal. Take the opportunity to walk or bike whenever you have the chance. You will save on gas while enjoying some exercise.

12. Shop around for the best insurance

Insurance can be a large expense. Not having proper insurance can significantly derail your financial goals. It is critical to choose the best types of insurance for your life and your budget.

Once you have a better understanding of what insurance you need, make sure to shop around for a policy. Shopping around can save you thousands.

13. Swap out your lightbulbs

LED lightbulbs use a fraction of the energy that a standard bulb uses. Plus, they last many years longer.

Over time, it can help you with how to lower your electric bill. Consider making the switch.

14. Automate your savings and investments

After setting up spending goals, it is important to automate your finances. Otherwise, you may easily fall back into the habit of overspending.

One of the best tips for retirement is to start by automating your retirement savings through your employer. Next, consider automatic payments for all of your bills. Run through your finances to find new ways to automate your money and use frugal living tips.

15. Check out the library

While many prefer to purchase books on Amazon or a local bookstore, a library is an amazing place full of free entertainment. Of course, they have a wide selection of books.

However, most libraries also have extensive collections of movies, magazines, and more. If you haven’t signed up for a library card in your area, then please do.

You might be able to sign up online, and you can access your local library’s selection of books (including audiobooks) via apps like Libby and Overdrive.

You’ll be shocked at the sheer amount of resources available to you for free. In addition, check out our list of the best passive income books.

16. Evaluate your subscriptions

Are you guilty of having more subscriptions than you really need? Take the time to comb through your subscriptions and decide which ones are worth keeping.

In addition, you might have more time to enjoy one or two of your subscriptions if you cancel the rest.

17. Have date nights at home

Date night doesn’t have to mean an expensive restaurant or a movie out. 

For instance, it could mean a board game night at home or a walk through your neighborhood. Find creative ways to enjoy each other’s company with at home date night ideas while staying within your budget as a couple.

18. Get a part-time job

One surefire way to accelerate your savings is to pick up a part-time job.

Although you can find a job in your local community, work from home jobs tend to be more flexible. If you already have a 9 to 5, then consider finding one of the best work from home jobs.

There are many interesting options. It is important to find something that interests you. Otherwise, it can be difficult to find the energy to work after a long shift at your day job.

19. Pay down your debt

Debt is a drain on your resources. Make it a priority to clear your debts for good.

Once you eliminate debt from your life, you will never want to go back. Finding frugal ways to live within your means will allow you to break free from these financial burdens.

20. Avoid credit card debt

Credit card interest is expensive, and it can be easy to rack up unnecessary debt fast with credit cards. So it’s essential you pay your balance off in full every month if you do use your credit card. If you are unable to pay it in full, it’s best not to use it.

One of the key frugal living tips is avoiding credit card debt because you can save a bundle of money and stay out of debt. So, find out how to stop paying credit card debt and stop worrying about it.

21. Downsize

Living in a larger home has its perks.

However, the costs of living in a bigger space can add up. Not only are you paying for more square footage but also the little costs that come along with it, like utilities. Consider downsizing your living space to a more affordable living situation, and start living below your means.

22. Try a low-buy or no-spend challenge

Sometimes, it’s easier to stick to something if it’s in the form of a challenge.

If you’re not sure where you’re money is going, why not try to do a low-buy year or no spend year? Or, if a whole year intimidates you, try a no-spend month to start with and go from there.

23. Use money-making apps

Put some extra money in your pocket with these 26 best money-making apps! You can earn cash back, invest your spare change, or sell those beautiful sunset pictures on your smartphone. Earning extra money has never been easier when learning how to be frugal.

24. Buy in bulk

Buying frequently used items in bulk, such as toilet paper, toothpaste, paper towels, soap, etc., is one of the frugal tips that can save you money on your grocery bill.

The price per unit is usually lower when you buy in larger portions, and you can make fewer trips to the store, too. Remember, if you purchase perishable food items in bulk, you should cook and freeze them to prevent waste.

25. Ditch cable

Depending on what cable package you have, this is one of the ideas that can lead to significant savings if you’re paying $100 a month in cable, which is $1,200 every year!

You could quickly build your emergency savings and start saving for a luxury purchase if you wanted by living frugal.

Instead of expensive cable, opt for a cheaper streaming service or cable alternatives and rack up those savings.

26. Frugal traveling

One of the best frugal living tips is to travel frugally. You can save a good chunk of cash by traveling places during what they call their “off-season” and still have a wonderful vacation.

You can also save while traveling by cutting down on eating out and opting for a place with a kitchen so you can make some of your own meals.

Also, things such as purchasing discounted airline tickets or fares can save hundreds of dollars. 

27. Skip the salon

Okay, we all need our beauty treatments and pampering, but skipping the salon when possible can save you so much money.

For instance, if you get your nails done twice a month at $25 a pop, that’s $600 in a year! Even if you reduce it to once a month, this is one of the savvier frugal tips that will help you save money quickly and still pamper yourself.

28. Make gifts instead of buying them

Whether you’re getting a gift just because, for a birthday, or it’s the holiday season, making your gifts instead of buying them can reduce spending and avoid credit card debt too.

The winter holidays are extremely expensive and can be challenging for those on a budget. Making gifts can be more meaningful than purchasing them too. Check out Pinterest and YouTube for some great gift-making ideas!

29. Grow your own vegetables

Did you know you can grow vegetables indoors? Whether you live in an apartment or have a house with a yard, you can grow some of your own vegetables and herbs to save money. Not only is growing your own vegetables one of the more unique frugal living tips, but it’s also fun too!

30. Lower your electric bill

There are many ways you can lower your electric bill.

For instance, you can use fans if possible when it’s not too hot to cut back on using your air conditioner. You can avoid cooking with your oven on hot summer days to reduce use too.

You can also use cold water when washing clothes to cut costs on your bill as well. There are many ideas on how to lower your electric bill to help you save money.

31. Fun for free

Nothing makes a challenge easier than making it fun. One of the best frugal living tips is having fun for free. There are a ton of free fun things to do, such as going to the park, having a picnic, or having a bonfire.

Or if you do want to spend money without spending, save up any gift cards you get as presents or for holidays, and then spend them doing something fun!

32. Cut expensive coffee

Millennials are willing to spend over $2,000 a year on coffee, claims Newsweek according to Empower research! Yikes!

I’m not saying cut out your favorite coffee, but reducing how you spend can be a big deal. Even if you average $20 a week on lattes to go, that’s still a whopping $1,040 a year.

It’s hard to cut yummy coffee, but you can purchase different flavors of coffee and creamer and have your cup of joe at home and put that cash in the bank. Coffee at home is one of the frugal living tips that can save you a bundle of money!

33. Fitness at home

More and more Americans are opting to work out at home. The average gym membership can be about $40-$70 per month, claims Good Rx Health, equaling $840 in a year on the higher side.

However, you can find home workout videos on YouTube and save quite a bit of money by exercising at home.

34. Stop impulse buying

Impulse buying has never been easier, thanks to e-commerce. You can find anything and everything at the touch of a button, and before you know it, those late-night shopping sprees cost you hundreds to thousands of dollars.

Learning how to stop online shopping is one of the most crucial frugal living tips to help you save money.

35. Determine what things you can do without

Just because you can buy something doesn’t mean you should. As you work on stretching your dollars, determine what things you can do without. Whether it’s temporary or permanent, this can really give you a boost by saving more money.

36. Try homemade cleaning products

Making your own cleaning products using natural cleaners like vinegar can save you from buying the overpriced stuff from the store.

While it takes a bit of know-how and time, it’s easy to learn how to clean your home naturally and without spending much at all. You can use ingredients that you already have in your cupboard or can easily purchase during your next grocery run.

37. Eat less meat

Meat is quite expensive to buy and can affect your budget. And if you love steak or chicken, you don’t need to give it up completely.

But having one or two dinners a week that don’t include meat can save you some grocery money. Salads, soups, and baked potatoes are all easy meals that don’t require meat.

Expert tip: Make a list of things to try

When it comes to leveraging these frugal living tips it’s a good idea to make a short list of tips you want to try. Once you’ve done this, you can build them into your routine and lifestyle one by one.

Not every frugal tip will be a good fit for you so instead focus on which of the tips will work best for your lifestyle!

Benefits of living frugal

First and foremost, a frugal life will allow you to build more financial freedom into your life by accelerating how quickly you achieve your financial goals. You can allow for a cause-and-effect reality to take hold.

Every time you choose to spend less money on something, you can put that money towards things that matter to you. The best part is that you get to decide what matters to you most.

Maybe you will put your newfound savings away for early retirement. Maybe you will put them aside to fund your dream of living on a sailboat. Or maybe you will allow the safety net of savings to allow you to pursue a job you thoroughly enjoy.

How do you develop a frugal mindset?

Developing a frugal money mindset involves being particular about what you allow to influence you. It means you know what you want, and you focus on your own financial and life goals, not what others have.

In addition, it involves thinking strategically about purchases before you make them and thinking long-term.

For instance, if travel is important to you, then you may choose not to eat at expensive restaurants, and you may opt for the library instead of buying cable for entertainment. Then you will be able to afford the next trip you want to take.

It’s all about being careful with what you spend your money on.

However, you must also know when something is worth buying.

For example, a large home, a new sweater, or excellent food may be valuable to you. You can look for deals with the things you do want to buy and say no to what isn’t the most important to you.

How do you live a low cost frugal lifestyle?

Don’t be afraid to make some changes along the way as you learn how to live a low cost frugal lifestyle. As you start to try out different frugal tips and savings hacks, remember that this is not a one-size-fits-all strategy.

Instead, you will need to try out different frugal living tips and see how they feel. You may find that giving up meals out is not a problem, but forgoing your favorite brand of shampoo is not going to be an option.

Simply try new tips and strategies out with an open mind. You will likely need to do some experimenting to find the balance that works best for you.

It is critical that you don’t overdo it. Although it is exciting to learn how to drastically cut expenses without mercy, too many cutbacks could lead to a backfire. Instead of saving over the long term, you might experience burnout and forgo the savings altogether.

A good way to start living frugally is to add new frugal tips and strategies slowly. Try them out to see how they feel. If you like a strategy, then keep it and add another.

If you hate a strategy, then let it go and try something else. You may need to try many strategies before you truly find your frugal stride.

Is it worth it to live frugally?

Yes, if you are tired of letting money control your life, then frugal living is worth it.

However, it is critical to look at the positives. If you only look at the sacrifices that come along with how to be frugal, then you will have a difficult time staying on this path.

Of course, you will have to give things up along the way. But these sacrifices on your journey can add up to larger benefits down the line.

Remember, you are choosing to be frugal in order to enjoy the things you prioritize. If you keep your priorities in mind, it may not be as difficult to live a frugal life!

How can you be frugal like a millionaire?

Everyday millionaires think about the future rather than just the present when making buying decisions. It’s all about prioritizing. So you might ask yourself some questions to help yourself be frugal.

For instance:

• Will this make me more money in the future?
• Do I truly want this item, or do I need it?
• Is there a less expensive alternative?
• How can I save more for what matters?

Does frugal mean cheap?

Absolutely not, frugality should not be confused with being cheap. Cheap means going to the store to buy the lowest-priced item without a thought to quality.

Frugal means assessing your desires and choosing to spend less money on the things that don’t really matter to you.

For example, you may choose to spend less on clothes to fund your next vacation budget.

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If you’ve enjoyed this article on frugal living, check out these next:

• 35 Delicious Frugal Meals For Every Food Category
• 8 Tasty Frugal Meal Plans To Try!
• Frugal Vs Cheap: Why Frugal Is Better!
• The 29 Best Frugal Living Blogs

Leverage these frugal living tips to save more money!

Living frugally doesn’t have to be a sacrifice. Make an effort to think of frugality as a way to fully enjoy what you care about in life.

When you have your money under control, it can be easier to spend on things that matter. Try out a few frugal living tips at a time to find out which works best for you. You can also get inspired by these great frugal living blogs.

Don’t forget to access our awesome and 100% free courses and worksheets to help with your “how to live frugally” journey and help you become financially successful!

The post 37 Frugal Living Tips To Save A Ton Of Money appeared first on Clever Girl Finance.

Life insurance is one of those things that we kind of know we need, but many of us don’t want to deal with getting it right away. Sometimes, it’s hard to even think about because, for many people, the whole idea is just plain scary. However, we can’t downplay the importance of life insurance, how life insurance protects our finances and family, and how much peace of mind it can give you.

Perhaps you feel like you are young and have plenty of time, or you even feel like, if something happened to you, there would not be any major financial impact. Or maybe you can’t decide what insurance type would work best for you.

Well, if you’ve ever felt any of the above, this article is here to help you understand the importance of life insurance and how to ensure you are covered. Let’s get into it!

Benefits of life insurance

Life insurance is not something to be afraid of at all.

In fact, having life insurance is protection for you and your loved ones that can minimize or potentially eliminate financial distress.

And it’s something you want to seriously consider, especially if you have kids or dependents or hold assets like a home.

There are seven main benefits of life insurance:

1. Financial safety net for you and your family
2. Creates generational wealth
3. Covers final expenses
4. Replaces income after a death
5. Provides a tax-free death benefit
6. Customizes protection and living benefits
7. Supplements retirement or other savings

Let’s dive a little deeper into the importance of life insurance and why it’s a good idea for you.

1. Financial security for your family

The main benefit of a life insurance plan is to provide financial protection and peace of mind to you and your family.

When you have a life insurance policy, you can be sure your family will be taken care of, even if you pass away. While it’s not fun to think about, knowing your family is protected can help take a weight off of your shoulders.

That peace of mind and relief is enough of a reason to get life insurance for many people, especially if you have children.

2. Builds generational wealth

Yup, life insurance is one way in which people transfer their legacies and create generational wealth.

Having life insurance is a foundational element when learning how to make a financial plan.

When you pass, your assets go to your heirs. So, a life insurance policy can be a major asset to pass on to your children or other dependents.

But keep in mind that you don’t need to have a million dollar life insurance policy. Having enough to cover what you bring to your family is a good start.

3. Covers your final expenses

Funerals and other end-of-life costs are expensive. Depending on your final needs, your family may have to pay thousands of dollars to put you to rest.

Part of the importance of life insurance is that it’s a great way to cover funeral expenses and help you out with what to do when a loved one dies. Your beneficiary can use the proceeds of your life insurance policy to cover the final costs you may have.

4. Replaces lost income

Do you bring in income to your family? Additionally, what would happen if they suddenly lost access to your income?

Life insurance addresses this issue by replacing lost income when a family member dies. These funds can be essential to helping your loved ones cover day-to-day living expenses.

Additionally, life insurance benefits could help cover big life expenses for your beneficiaries, such as college tuition.

5. Tax-free inheritance for your heirs

Did you know life insurance has tax benefits?

For example, in general, most life insurance payouts are tax-free for beneficiaries. So your heirs will simply receive a lump sum payout without paying income tax on the money.

For instance, let’s say you have a $500,000 policy and pass away. Your beneficiary would receive $500,000 in cash without paying income or estate taxes on it.

In addition, think how far that money could go toward their short and long-term needs and financial goals, which really shows the importance of life insurance!

If you are wondering if your life insurance payout will be tax-free, refer to this helpful tool from the IRS.

6. Access living benefits with riders

Your beneficiaries aren’t the only ones who can benefit from your life insurance policy. Policyholders can use riders, also called endorsements, to customize their policy with living benefits such as:

• Long-term care
• Disability income
• Guaranteed insurability
• Critical and chronic illness riders to cover medical bills

Be aware, however, that adding endorsements to your policy generally increases your premium payments.

7. Supplement retirement savings with cash value

Specific types of life insurance can help you build wealth even while you’re still alive.

For example, permanent life insurance policies like a whole life policy have a feature known as cash value.

Cash value life insurance is a type of savings account with interest, and it’s tied to your life insurance plan. Part of your insurance premiums go into the savings account.

You can use the money in the account as extra savings, such as a boost in retirement.

Additionally, some policies let you use cash value to pay ongoing insurance premiums once you reach a certain value.

Expert tip: Don’t wait to buy life insurance

The earlier you get life insurance, the better. In fact, life insurance premiums tend to be lower the younger you are. If you wait until you’re older, you may pay more in premiums.

In order to save money and be sure your finances are covered, It’s a good idea to get life insurance as soon as possible.

The cost value of all you do and how insurance ties in

As a mom of two small children with a small business, I have a huge impact on my family’s financials. And it’s not just tied to the money I bring in with my business. It’s also from the cost of all I do in my household.

One day, I sat down to really calculate the cost value of all I do for my family, and I was surprised. Shocked even.

I added in all my jobs. They include:

• Watching and teaching my kids (Job title: babysitter/teacher).
• Cooking for my family (Job title: chef).
• Cleaning my home (Job title: housekeeper).
• Driving my kids around (Job title: car service).

If I were to hire people to do all of these things that I currently do for my family, it would cost me over $70,000 a year!

That alone would have a huge financial impact if (God forbid) something were to happen to me. And I didn’t even include my other annual financial obligations, for instance, my kids’ education expenses or our household bills and mortgage.

Life insurance is a non-negotiable for me for this reason. My 20-year, $500,000 term life insurance policy will help ensure my family is protected financially and can help to cover several years of the loss of my value and income.

My husband also has a life insurance policy in place as well since he also contributes substantial income to our family. If you are the primary female breadwinner or the only breadwinner, then putting yourself in this scenario makes having life insurance even more critical for you.

Life insurance and your long-term goals

What are some of the biggest long-term financial goals you currently have?

Personally, I’m saving for retirement and my kids’ college education through 529 plans and custodial accounts. I have a vision of exactly how I want to retire, as well.

In addition, similar to the gift my parents gave me, my husband and I have decided that we will be paying for our kids’ college education in full, wherever they choose to go. (As well as imparting financial literacy for kids to my children).

But again, if something were to happen to me, these goals could very well be thrown out the window if both my spouse and I don’t have a life insurance policy in place.

It could mean a difficult retirement for me or my spouse and student loan debt for my children. All scenarios I don’t want, and that’s why I recognize the importance of life insurance, in addition to my savings and investments, as a safety net.

Make the process of getting life insurance simple

The truth is life can be hard, and unexpected situations happen.

However, it’s better to have a plan in place than face the unknown unprepared. One key element of your plan should be getting life insurance.

The good news? It doesn’t have to be a complex process.

Term vs. permanent life insurance

The first place to start would be to determine whether you need term vs. whole life insurance that includes a cash value.

Term policies are life insurance that expires after a set number of years, known as the policy term. At the end of the term, the policy expires, and you no longer have coverage.

Typical term lengths range from 10 years to 30 years or more. Some term policies have conversion riders that let you convert your policy to permanent life insurance.

Permanent life insurance works as it sounds: it lasts your whole life as long as you keep paying premiums. While permanent coverage tends to be more expensive, you may find the additional cash value and other benefits to be worth the cost.

Determine coverage needs

Once you know if you want term or permanent coverage, you can figure out how much coverage you need. There are many life insurance calculators available online to help you estimate your needs.

You can also reach out to a local life insurance company or agent for advice on your coverage options. They’ll be able to help you calculate a death benefit amount and discuss any riders you might need.

Compare coverage options

Be sure to shop around to compare policies and rates before you make a final decision. I recommend getting at least three life insurance quotes from different providers before signing up. Getting multiple quotes for similar policies will let you compare costs side-by-side.

You should also do due diligence on the life insurance company. Try Googling the insurance company and reading online reviews. The last thing you want after you pass is for your loved ones to have to deal with a difficult life insurance company.

Apply for coverage

So, you’ve found a life insurance policy and are ready to sign up.

First, you’ll need to fill out an application. Many policies will also require a medical exam to determine your risk level. Some policies, such as online term life insurance, offer coverage without a medical exam.

After your exam is done, the life insurance company will determine your risk rating. The better the risk rating, the lower your premiums. Generally, young, healthy people pay the least in insurance premiums.

Sign your coverage and put it in force

Once your insurance application is approved, you’ll receive a copy of the policy and a form to sign. Be sure to carefully read the policy to make sure you’re getting the coverage—and premium payment—you agreed to.

What is the most important use of life insurance?

The most important use of life insurance is to provide financial support for your beneficiaries after you die. Financial support might mean paying a child’s college tuition using life insurance proceeds.

Or, your life insurance policy could help cover the loss of your income if you’re the sole breadwinner in your family.

No matter how the funds are used, life insurance is there to help ease the financial burden of your death.

What are 3 things life insurance covers?

Life insurance coverage protects your family from financial hardship after your death. The importance of life insurance can be broken into three categories:

1. Covering the daily or future needs of your loved ones.
2. Building generational wealth for your descendants.
3. Providing living benefits for you as you age.

What are the pros and cons of life insurance?

While there are many good things about life insurance, there are also drawbacks. Take a look at some of the pros and cons to help you find a policy that’s right for you.

Benefits of life insurance

The pros of life insurance include:

• Financial protection for your family
• Customized coverage to fit your needs
• Easy access through online life insurance companies
• Rounds out an estate plan
• Builds wealth for future generations
• Protect your peace of mind

Cons of life insurance

The cons of life insurance include:

• Expensive for older adults or those with health conditions
• Cash value may not provide a huge nest egg

Articles related to life insurance

If you found this article about life insurance helpful, read these informative posts next!

• Term Life Insurance VS Whole Life Insurance? What’s Best for You?
• What Is Credit Life Insurance?
• How Does Cash Value Life Insurance Work?
• Do You Really Need A Million Dollar Life Insurance Policy?

Don’t overlook the importance of life insurance

Ultimately, the importance of life insurance is to provide peace of mind that your loved ones will be taken care of. And thanks to the internet and new technology, it’s easier than ever to get coverage in almost no time at all.

Whatever your financial situation, life insurance protects you and your loved ones. Other great things to consider for financial security include building an emergency fund and investing regularly for the future.

The post The Importance Of Life Insurance For Your Finances appeared first on Clever Girl Finance.

It’s important to understand what to do if your identity is stolen. Lately, it seems like every few months, there is a news report about a security breach. These breaches can potentially make people susceptible to identity theft and credit fraud.

Someone can steal your identity in multiple ways, from a lost wallet or purse to using public Wi-Fi. Thieves may even steal your information from ATMs.

All this can leave many wondering what to do if someone steals your identity, furthermore, how to know if your identity has been stolen. Knowing that security breaches can and do occur, here are some key things you need to do.

You can minimize the impact and protect yourself from potential credit fraud when you know how to report identity theft.

15 Steps for what to do if your identity is stolen

If someone steals your identity, this can affect many things. It can compromise your personal information, from debit cards to types of bank accounts, bank account numbers, and driver’s license numbers.

Because this can happen without you realizing it, preparing and knowing how to report identity theft is essential.

From knowing the answer to “How do I file a police report for identity theft?” to “How do I notify the post office?” you’ll find answers here.

You can take many preventative measures, such as having insurance and identity theft protection services, monitoring credit reports, etc. Also, find out where to look to see if theft has occurred.

Unfortunately, victims of identity theft have to work hard to fix a problem they didn’t create. However, having preventative measures in place can help with ID theft.

1. Check your credit immediately to confirm if your identity was stolen

If you have concerns about identity theft and want to know what to do if your identity is stolen, check your credit immediately with a free credit report. You want to make sure everything on your credit report is as expected.

Get your free credit report

You can access a free copy of your credit report from all 3 credit bureaus each year via annualcreditreport.com.

Many banks are also now offering this service for free with your accounts. 

Alternatively, you can choose to pay for one.

The bottom line is that you must stay on top of checking your credit to ensure nothing strange is happening there, so checking copies of your credit report reasonably often is smart. If things are amiss, keep reading.

2. Alert the credit bureaus immediately

Alert the credit bureaus to report the situation and place a fraud alert or freeze on your credit reports to prevent additional damage.

A credit freeze (or security freeze) lets you restrict access to your credit report. A freeze means lenders cannot access your credit to approve any unauthorized lines of credit until you remove the freeze.

You can get a freeze on your credit from each of the 3 major credit bureaus – Equifax, TransUnion, and Experian.

It’s a good idea to learn how credit works and check in at least once a month, regardless. If you’re wondering does checking your credit score lower it, checking your credit does not impact your score.

3. Get a credit monitoring service in place

Just because a breach happened does not mean identity theft or credit fraud will happen immediately.

With what to do if someone steals your identity, know that it could take months or years before you are affected.

If a security breach impacts a company, e.g., Equifax, they may offer free credit monitoring for some time.

However, several other companies can do this for you as well. 

How credit monitoring helps you

Credit monitoring is a big part of understanding “How does credit work?” Credit monitoring will alert you when someone applies for a line of credit or adds one in your name. The monitoring will help you track exactly what’s happening with your credit.

Remember that even if you have a credit freeze, it’s a good idea to have credit monitoring because fraud could happen on your existing accounts, which a credit freeze does not impact. 

However, a credit freeze will prevent credit card companies or credit card issuers from accessing your account for new credit.

Putting an extended fraud alert on your credit report also protects you from fraud. You can choose how many years you keep the fraud alert in place, which means creditors will take more time to verify who you are before giving any credit. An extra step like this can make you aware of potential future identity theft.

4. Report the problem to the FTC

As soon as you realize your identity is stolen, you should report it to the Federal Trade Commission (FTC) right away.

By making this report to the FTC, you’ll get guidance on creating a recovery plan. They explain that they’ll provide you with guidance on how to:

• Close new accounts made in your name
• Remove charges you didn’t make from your accounts
• Clear your name of criminal charges
• Manage theft on specific accounts, e.g., government benefits, student loans, bankruptcy filed in your name, etc.
• Fix your credit report

By filling and documenting this report quickly, you may also be able to limit your financial liability.

5. File a police report

Identity theft is a crime. So you’re probably asking, “How do I file a police report for identity theft?”

When figuring out what to do if your identity is stolen, a police report from your local law enforcement agency can help support any claims you file to dispute theft.

By filing a report with your local police department, you may also be aiding the police in fighting existing identity theft cases.

When you file the police report, be sure to have a copy of your FTC report and proof of your stolen identity, in addition to your address and ID, according to US News.

You’ll also want to get a copy of this report to share with the credit bureaus, creditors, and service providers to keep on record as part of your case file.

So now you know the answer to, “How do I file a police report for identity theft?” and you’re one step closer to getting your life back to normal.

It’s also a really good idea to file an additional report with the Federal Bureau of Investigation (FBI) as they also investigate financial fraud cases.

6. Get access to any documents related to the identity theft

To better prepare, you should gather all the documents associated with the theft. It’s also a good time to learn how to declutter paperwork!

You can write a request for the documents to the company where the theft happened, and you must also include a police report, an FTC identity theft report, and identification when you do this, according to the FTC.

7. Be sure to notify the IRS

You must also make the IRS aware of any identity theft. Someone could attempt to use your information to create a fake tax return and get money from a tax refund.

You can go to the Internal Revenue Service website to find out what to do if your identity is stolen. In addition, you’ll find out how to notify them about the fraud.

8. Let the DMV know

You’ll find out there can be problems with your driver’s license also, so it’s essential to understand what to do if someone steals your identity related to your license.

If you suspect someone has stolen your license, contact your local Department of Motor Vehicles and inform them about the situation. You can add a flag to your license to prevent fraud.

9. Notify your health insurance of the fraud

When deciding what to do if your identity is stolen, you’ll find that you may also need to let your health insurance company and providers, etc., know about the fraud. Someone may be trying to use your insurance for medical procedures or medicine, so telling the insurance companies is helpful.

Look through your medical records and ensure everything is accurate, and report anything that isn’t to your health care provider, according to the FTC.

10. Contact the Social Security Administration

You should also inform the Social Security Administration if someone steals your identity. 

If you think someone could be using your social security number, you can contact the Social Security Administration (SSA). They can check their records to make sure there isn’t any fraud.

11. Contact the post office

Be sure to contact the post office as well. Contacting them helps to ensure that no one tried to authorize a change of address in your name. 

You can also fill out paperwork to make sure they are aware of the situation and have a record of the theft.

12. Change online passwords and pins associated with your financial information

Changing the passwords or pins you have associated with your personal and financial information is a good idea as soon as possible.

You may not know exactly what information the thief took, so it’s better to take all precautions, and this is one of the smartest money habits, too.

You can set calendar reminders to change your passwords every few months. Make sure that you create strong passwords that are not easy to guess. Also, avoid using devices you don’t trust.

13. Contact your creditors and service providers

You’ll also want to report the situation to creditors or service providers. You can then begin the dispute with them for fraudulent claims in your name.

You can provide the FTC and police reports you filed to them as well to help further validate your claim. Identity thieves can set up services like utilities in your name, so contacting your service providers is essential.

Also, notify companies reporting inaccurate information to the credit bureaus due to identity theft. That way, you can stop the effects on your credit score.

14. Review your bank and credit card accounts and statements

Take some time out to review your bank and credit statements for any discrepancies.

You may be able to catch the theft early by doing this. Especially if the transactions are not on your credit profile yet. Be sure to make your bank’s fraud department aware of the situation.

15. Look for any fraudulent accounts in your name so you can dispute and close them

As you review your credit profile, look for any fraudulent accounts in your name. If someone contacts you due to debt owed on a fraudulent account, provide them with your FTC and police reports.

You can also ask for the details about the account and file a formal dispute with them for any balances due.

If you can learn more about the identity thief, you can report this information to the police and FTC.

The FTC also provides sample letters to help you request that a debt collector stop collecting debts you don’t owe.

Expert tip: Create a plan to recover your identity

A stolen identity can mean weeks or months of headaches and frustration for you. If you’re a victim of ID theft, it’s important to quickly follow the necessary steps to get your life back on track.

However, some steps to recover your identity may take longer than others, and you likely don’t have unlimited time to deal with this inconvenience. Though you want to act quickly, it’s alright to take a few moments to make a plan to fix everything, one that works with your schedule. 

For example, you may need to call the credit card companies during your lunch hour tomorrow, file a police report on your day off, and review your statements over the weekend.

In many cases, taking the first few steps to get things back to normal , and planning to succeed, will help you feel better and give you the momentum you need to continue.

How to determine if your identity has been stolen

You can tell if someone has stolen your identity in a few ways.

Fraudulent transactions on your accounts

The first, and one of the most obvious, is if you notice any fraudulent transactions on accounts. 

If any information with your credit looks inaccurate, or you see information for accounts you didn’t open, this can be a sign of theft.

Your information in data breaches

Other ways to know if your identity is stolen, according to McAfee, are if you find that your personal information was in a data breach, you find out about a tax return in your name that you didn’t file, or you get mail at your address, addressed to someone else.

How to prevent identity theft

Ideally, you can prevent someone from stealing your identity instead of wondering what to do if your identity is stolen.

Don’t share personal information

Don’t give out any banking details or personal information to anyone you don’t know. 

Phishing scams (online scams that try to get your personal information) are a common way to steal identities, so avoid this by not giving any information to unknown sources or even sources you haven’t verified.

Even if the company appears legitimate, make sure it is the company you think it is and not a scammer.

Monitor your credit

Your credit is one of the first places you can check for a stolen identity. Monitor it by checking your credit score, tracking your transactions, and getting your free credit reports each year.

Get identity theft insurance

One thing that you can do to protect yourself is to get identity theft insurance for it. Insurance means you can continue your life and still be alright financially, even if you have to deal with a problem like this.

There are lots of things identity theft insurance can cover. According to LifeLock, it can include reimbursing you for stolen funds, replacing lost wages, and covering legal fees and other costs.

You can get this insurance from most insurance companies and the credit bureaus also offer insurance options as well.

What is the first thing you should do if your identity is stolen?

If you suspect your identity is stolen, you should first notify the credit bureaus and freeze your credit. That way, you can try to prevent further damage. There are several vital steps to take after that, but you can start there.

How do I start an identity theft investigation?

To start an identity theft investigation, contact the Federal Trade Commission. They can help you make a report and then start getting your life back to normal. Also, file a police report, which can help you start an investigation.

What are 3 steps to take after your identity has been stolen?

Three key steps to take after you find out that your identity is stolen is as follows:

1. Let the credit bureaus know you’ve been a victim of identity theft to avoid further credit damage. 

2. Inform the Federal Trade Commission, as well. They can help you figure out what to do next. 

3. File a police report about the identity theft at your local police department. You can also file a report with the Federal Bureau of Investigation (FBI).

These 3 steps can give you a simpler life and help you know what steps to take in the next few days and weeks.

Articles related to identity theft

If you found this article about what to do if your identity is stolen helpful, check out these posts next.

• Key Steps To Take Now For A Lost Wallet
• 10 Types Of Insurance You Need But May Not Have
• Credit Freeze 101: Should I Freeze My Credit?
• How To Rebuild Your Life After A Financial Downturn

Get your life back to normal faster by knowing what to do about identity theft

Don’t panic if your personal and financial information is part of a security breach. It’s frustrating, but if you take the above actions quickly, hopefully, you can minimize the impact on your finances by knowing how to report identity theft.

It’s also essential to take precautions even if you have not had your identity stolen. Be sure to store your financial records properly, know how long to keep financial records, and stay on top of reviewing your bank, credit, and service statements.

If someone steals your identity, don’t stall on taking action. The sooner you start addressing it, the quicker you’ll resolve it. And while you’re at it, be sure to review other aspects of your financial health including a financial check up.

The post What To Do If Your Identity Is Stolen: 15 Key Steps appeared first on Clever Girl Finance.

Think you don’t have enough money to start investing? Think again! You can learn how to start investing for beginners today, even if you start your investing journey with just $100.

Although you might start out by investing small amounts, it can be a turning point in your finances. Investing money for beginners doesn’t have to be hard either!

When you decide to start investing, the most important part of the process is educating yourself. Learning how to invest for beginners will help you ease yourself into it and avoid common mistakes. Once you have a better understanding of investing, you will feel more comfortable as an investor growing your investments over time.

If you are reading this, then you are in the right place to get started. In this post, you’ll learn about how to start investing for beginners. And this information applies whether you have just a little money to invest or a lot of money to invest!

(P.S. As a woman, studies show you can be an amazing investor!)

What is investing?

When you decide to invest your money, you are choosing to put it into a vehicle with the goal of receiving a return down the line.

At some point, you hope that the money you put into an investment will grow. In most cases, you plan for little ongoing involvement on your part once you’ve invested the money.

Although most people associate investing with the stock market, there are many different types of investments. For example, you could invest in real estate or your own business. Ultimately, you’ll figure out your own investment style as you go.

No matter what assets you choose to invest in, you hope to earn money on that investment in the future.

Why is investing important?

Investing is one of the best ways that you can grow your money for the future. However, investing is not the same as simply saving money. Let’s look at a few reasons why investing is so important.

Investing can beat inflation

Saving money is an important place to start building a better financial future. However, your savings are diminished each day by the powers of inflation. Although your savings account might have the same balance ten years from now, that money will not have the same purchasing power that it has today.

Investing may seem like an expense, but really, with successful investments, you should be getting all that money back plus more. With investing, you are able to grow your money over time and keep the powers of inflation at bay.

Historically, the stock market has provided returns between 6% and 7%, with inflation factored in. Those returns can grow your savings dramatically over time.

Compound interest grows your money

The power of compounding can add to your nest egg. If you choose to reinvest your earnings over the course of many years, you’ll benefit from the compounding effect. Compounding is a process that grows your money over time by reinvesting your investment earnings.

Your money is always working for you

If you are just starting your journey of building wealth, then investing can help you reach your long-term goals faster. Instead of trading your time for money in order to build wealth, you can have your money work for you.

When your money starts to earn money through your investments, you won’t be completely dependent on your day job or your savings.

When should you start investing?

Before we dive into how to start investing, let’s talk about when you should start investing. Investing strategies typically involve a long-term timeline. With that said, the best time to start investing is as soon as possible.

The sooner you are able to start investing, the more time you’ll have to allow your investments to grow. Even when you’re investing for beginners with small amounts, it will add up over time.

Generally, you will use these investments to fund your retirement. So it is a good idea to start as soon as you can. You’ll want to give your investments plenty of time to build your wealth.

Learning how to start investing is an extremely important part of your financial journey. However, there are a few things that you should tackle before you start investing. Let’s take a closer look.

After you pay down high-interest debt

Paying off debt is the first step as you start thinking about investing for beginners. If you have any debt that is draining your resources each month, then you should focus on paying that down first.

Specifically, aim to knock out any high-interest debt, as this debt costs you the most as a result of compounding interest. An example would be high-interest credit card debt.

Once you’ve paid down your debt, you’ll be able to invest more comfortably. 

When you have an emergency fund

Living one paycheck from the edge is not a good feeling. An emergency fund can allow you to enjoy more financial breathing room in your life. Before you start investing, consider building an emergency fund.

Once you’ve paid down your debt and built an emergency fund, then it is time to revisit the topic of how to invest for beginners. If you start young, then the power of compounding can work in your favor. Even if you only have a few dollars to start investing, you should take action as soon as you can comfortably do so.

Keep in mind, if your employer offers a free match on your investments, you definitely want to take advantage of this match ASAP. It is essentially free money!

How to start investing money for beginners

Investing can change your financial future for the better. You don’t need a lot of money to start investing. In some cases, you only need a few dollars to get started.

Of course, you might have a goal of increasing your investments over the long term. But don’t let limited resources stop you from building your long-term wealth.

1. Learn about the different types of investments

There are many different types of investments, and it’s important that new investors understand all of them. Then you can choose the options that are best for you when you create your investment portfolio and financial plan.

Here’s a list of some of the types of investments you’ll encounter as you make financial choices:

Individual stocks

Individual stocks are shares of a company you can buy and have partial ownership.

Bonds

A bond is a type of loan that you can invest in and gain interest and your money back over time.

Mutual funds

With mutual funds, your money is pooled with other investors and used to purchase many different types of investments like stocks and bonds.

Index funds

One of the most popular kinds of mutual funds are index funds. They track a specific stock market index, like the S&P 500. When you buy a share of an index fund, you basically get a little piece of every stock within that index.

ETFs

Also known as exchange-traded funds, these are similar to mutual funds, but are traded on the open stock market.

Target-date funds

A target-date fund is another subclass of mutual funds. They’re designed for investors who have a specific date in mind when they’ll need to use their investment money.

REITs

Also known as Real Estate Investment Trusts, these allow you to invest in income-producing real estate (you are investing in the company that owns the real estate).

2. Create your plan for investing

Next, it’s time to sit down and create your basic plan for investing. Do you have debt to pay off first? Is your emergency fund where you’d like it to be? If so, you’re ready to begin investing for beginners.

As you familiarize yourself with the different types of investments, make sure to research their pros and cons. For instance, investing in individual stocks can be much riskier than a diversified S&P 500 index fund. Figure out what kinds of investments you want to focus on.

Do you already have some money saved up that you’d like to invest? Figure out if you want to put it in the market right away as a lump sum, or gradually by dollar cost averaging.

Lay out your personal goals for investing as well. For most people, one big goal is funding their retirement. But you may have other goals for investing too. Maybe you want to buy a house in ten years. Or send your kids to college. Investing can help you grow your money for those goals too.

We also have a free course to help you create a plan for your future self through investing!

3. Determine how much money you should invest

In this step, you’ll be crunching some numbers! First, you’ll want to figure out how much money you’ll need for your goal. Then, you’ll calculate how much you’ll need to invest over the years to reach that target.

Some experts advise saving 10% of your income for retirement. But is that really enough? It depends on how much you make, when you want to retire, and how much you want in your accounts by then. Here’s how to figure out if 10% is enough.

If your target numbers are a lot larger than the amount you can realistically afford to invest, you’ll need to look into ways to increase your income.

4. Begin investing money into employer-sponsored accounts

You may work for a company, where you likely have access to some employer-sponsored investment accounts. In general, these accounts are aimed at helping you save for your retirement in a tax-advantaged way. Many employers offer a 401(k) or 403(b). 

If your employer doesn’t offer a retirement account, then consider opening an IRA to start saving for your retirement. When it comes to investing money for beginners, these are some of the easiest and most accessible options—and some of the most powerful, too!

5. Try a robo-advisor (a great way to start investing for beginners)

Robo-advisors are one of the simplest ways to begin investing money for beginners. A robo-advisor is essentially a virtual financial advisor. The use of algorithms and technologies eliminates the need for a human financial advisor.

It will provide automated financial management services and tailor your investment recommendations based on your goals. Using one can definitely give you a bit of a shortcut as you learn how to start investing money for beginners.

The benefit of using a robo-advisor is that the fees are typically low, even though you are getting customized portfolio recommendations. It is a great way to get started with building wealth with little money. 

Most robo-advisory firms offer low account minimum requirements and take care of portfolio rebalancing for you automatically.

If you are interested in trying a robo-advisor and want to learn how to invest for beginners with one, then check out our favorite investment apps below:

• E*Trade: An award winning app that makes investing easy.
• M1 Finance: A highly rated app that allows you to automate your investing.
• Wealthfront: Allows you to automatically diversify your portfolio for long-term investing.
• Ellevest: This app focuses specifically on female investors’ goals and takes your values into account for investing.
• TD Ameritrade: Allows you to trade your investments easily.
• Acorns: Allows you to start investing with just $5, and it has the feature of a round-up savings account.
• Betterment: A solid option with automatic investing in index funds.
• SoFi: Begin with just $1 and no management fees.

6. Seek out a brokerage account

If you’re opening an IRA or another personal investment account, you’ll need to do it through a brokerage. There are many online brokers available on the market today. Each offers different services and charges different fees.

As you sift through your options, consider what matters to you most. In some situations, you may want to buy and sell stocks on a regular basis. Transaction fees for this can add up quickly at some brokerage firms. 

In other situations, you might choose to invest in index funds with fees built in. Either way, you’ll want to find a brokerage account that minimizes fees for your investment style.

Many brokerage accounts are set up so you can learn how to start investing with little money. Here are a couple of great online brokers to start with:

• Interactive Brokers: Award-winning broker without the high cost.
• E*Trade: Offers a quick and easy process to open an account.
• Webull: There are no deposit minimums with this well-reviewed broker.
• Charles Schwab: An incredibly popular broker that can help you with your investing needs.
• Fidelity: Known for its decades of investing experience.
• TD Ameritrade: Offers low rates and plenty of investment strategies.

7. Consider certificates of deposit (CDs)

Certificates of deposit (CDs) are a safe place to grow your money if you have a low risk tolerance.

Although you will likely miss out on bigger returns through the stock market, you won’t have to worry about any dips along the way.

CDs can be a particularly good option to save up for short-term goals. If you anticipate needing money in a couple years, you might not want to risk investing it in the stock market, which has periods of ups and downs.

8. Invest in yourself (a big part of how to start investing)

Investing in yourself is just as important as investing in the stock market. You might choose to invest in your financial education, which could save you thousands of dollars over the course of your life.

You might choose to invest in your business, which could allow you to take control of your income. 

Or you could choose to invest in your health. After all, a healthy body makes life more enjoyable. Here are some tips for living a healthy lifestyle on a budget!

9. Continue with investing over time

When it comes to investing money for beginners and seasoned experts alike, consistency is key! The more frequently you invest, year after year, the closer you’ll get to your goals.

These tips will help you stay consistent in life, no matter what habits you’re working on. Whether it’s investing for beginners, eating healthier, or staying organized, consistent action will make all the difference.

Expert tip: Take your time and don’t make impulsive decisions

When you first learn how to start investing for beginners, you’ll be reading through a lot of information. And it might even seem pretty straightforward! Just do X, Y, and Z, and you’re all set—right?

But it’s always different when you’re just reading about something vs. when you’re actually doing it yourself. There are a lot of feelings that can come with the territory of investing and money management.

Maybe your coworker told you about this “hot new stock” and got you really excited about it. Before you invest your hard-earned money, take a pause. Do your own research to decide if it’s really a sound move, or a risky gamble.

Similarly, there could be a day when the market has a slump and lots of people are panic selling. Will you let yourself get caught up in that, or will you stay calm, cool, and collected because you were already mentally prepared?

Since emotions are temporary, try not to base investment decisions on your feelings or what the people around you are saying. Make your plan based on research and facts, and stick to it! This way, you don’t have to be afraid of the stock market.

Investing money for beginners: Where should you invest first?

Now you know about some of the different investing options and how to start investing for beginners. That said, if you’re trying to determine where to get started with investing first, here are our suggestions.

1. Leverage tax-advantaged retirement savings accounts from your employer first

An employer-sponsored retirement plan is the best place to start investing money for beginners. Examples of these account types include 401k, 403b, and 457b. By leveraging tax-advantaged accounts, you can take full advantage of their tax benefits.

Taxes for employer-sponsored retirement account

Usually, your contributions to your retirement account will be taken out of your paycheck before your taxes are deducted (also known as your pretax income). This reduces your taxable income. As a result, the taxes on your income after these deductions (post-tax income) would be lower at the end of the year.

Also, these accounts offer a deferred tax benefit. This means you don’t have to pay taxes on your investments until you start to make withdrawals on the accounts once you reach retirement age (age 59.5). Or at the required withdrawal age set by the IRS (age 72).

2. Set up your own IRA

Next, you can go about setting up a traditional IRA or Roth IRA (Individual Retirement Account). 

If your employer does not offer any type of retirement savings plan, an IRA is a great place to start. These account types also have their own tax advantages, which makes them particularly beginner-friendly. There is a contribution limit for these, according to the IRS, that you should be aware of, though.

Traditional IRAs have the same tax benefits as traditional 401(k)s. Roth accounts are a little different, because you pay taxes on your contributions the same year instead of waiting until it’s time to withdraw. Learn more about Roth IRAs and other 401(k) alternatives here.

3. Open your own brokerage account

Once you’ve fully leveraged the tax-advantaged accounts you are eligible for, you can also open a regular brokerage account. It will allow you to invest any extra money you have after you have maxed out your tax-advantaged accounts.

Keep in mind that while a regular brokerage account is a taxable account, you don’t have to pay any taxes until you actually sell your investments. These types of taxes are called capital gains taxes.

What to remember as you learn how to start investing for beginners

Investing is a great way to build a solid financial future. However, there are some pitfalls to look out for as you learn how to start investing. If you can avoid some of these mistakes, then you stand to save yourself thousands of dollars.

Understand the fees (and avoid them)

When you learn how to start investing and begin looking through funds to invest in, you’ll notice that each comes with a set of fees.

In many cases, the fees can range from 0.5% to 2%. Although that tiny swing in percentage points might not seem like an important detail, it can make a big difference in your portfolio’s growth.

In fact, a 2% fee could add up to hundreds of thousands of dollars over the course of your investing career. When you decide to invest, you should make sure to research the fees and minimize them wherever possible.

Prepare with your risk tolerance in mind

When you choose to invest your money, you should assume that you might lose some of your investment along the way. The market will rise and fall and there are plenty of fluctuations.

Although it historically has risen through the years, that is not an indicator that it will continue to rise steadily. It is likely that there will be some dips along the way.

It is important to understand your risk tolerance and consider that as you invest your money. Take our quiz to gain a better understanding of your risk tolerance. Researching your investments is also key when it comes to assessing risk.

You should also think about your investments in terms of what is a long-term goal or a short-term goal. Make it part of your personal finance plan to know how much you’re investing for the near future and how much for retirement, as this can affect how much risk you take with investments.

Diversify with different types of investments

The best way to mitigate your risk in the market is diversification of your investments. You don’t want to pool all of your investments into one particular company that goes under. 

Instead, you want your investments spread out in many sectors of the market. If one area of the market falls, then you will not be left with a badly sinking portfolio. As you learn how to start investing for beginners, try to get a mix of assets like stocks, bonds, mutual funds, and more.

Two great diversified portfolio types to consider are the three-fund portfolio and the all-weather portfolio.

Rebalance along the way

When learning how to invest for beginners, you should plan to stay on top of your investments over time. Make sure that you are still on track with your objectives and that the timeline still fits into your goals.

The market will rise and fall, you’ll need to rebalance to ensure that you don’t leave all of your eggs in one basket.

Automatic rebalancing can also be a great approach to ensuring your portfolio is always in alignment.

Don’t try to time the market

Remember, investing is a long-term strategy to build wealth. You should not try to time the market by buying low and selling high.

Not even the most advanced investors can consistently beat the market. Instead of looking for short-term wins, focus on long-term goals and gains.

Although you won’t build wealth overnight through the stock market, you can with many years of consistent investing.

Don’t forget about taxes

Remember taxes when you are planning out your investments. There are different strategies that you can use to lower your potential tax burden, but they require careful planning.

If you aren’t sure about the tax implications of your situation, then consider talking to a tax professional.

Don’t wait to invest

Although it is important to educate yourself before investing, you should not wait too long to get started. With investing, you want to have the value of time on your side.

The sooner you are able to start investing, the better, as your investments will have more time to grow. That time could lead to significant growth due to the power of compounding.

Avoid making emotional investment decisions

When you learn how to start investing, you will realize that you have some strong emotions attached to your investments.

After all, you are hoping that these investments will lead to a better future. And many people have a fear of loss that may make investing more challenging.

The stock market comes with highs and lows, and you should be emotionally prepared to weather these storms. When the market inevitably drops, you should not pull all of your money out of the market.

Instead, you should wait until it rebounds and you are ready to make a withdrawal. However, this is easier said than done.

In order to avoid a painful experience, make sure to understand your risk tolerance before you start investing. With that, you can choose investments that are less likely to cause panic in your life. Stick to what makes you comfortable, and always make your investment decisions with a clear head.

Remember, nothing happens overnight

You should not assume that your money will grow overnight when you start investing. In fact, it will rise and fall many times on the way to growth.

As you get started, realize that investing is a long-term strategy for wealth building. But it will not make you rich overnight.

What type of investment style is right for you?

The only person who can determine the best investment style for you is you.

You need to think about how old you are, how long until you retire, and what your risk tolerance is. Beyond that, think of your personality and what makes sense for you.

Robo-advisor options are best for people who like to have a little control over their own investments and like technology. Others who prefer some personal guidance may want to work with a financial advisor to discuss their options. After researching, choose what you’re comfortable with.

How should a beginner start investing?

Here are the key steps summarized when it comes to how a beginner should start investing:

• If your employer offers a retirement plan like a 401(k), talk to HR about setting up contributions.
• Whether or not you have a work retirement plan, you can also open an IRA through a variety of online brokers and invest in that.
• To make additional investments outside of retirement accounts, open a regular investment account with a brokerage firm or robo-advisor service.

These three options will allow you to invest as much money as you want!

Is $100 enough to start investing for beginners? 

$100 is absolutely enough money to start investing for beginners! Many online brokers have low account minimum requirements to make investing accessible to more people. Some don’t have an account minimum at all, so you could even start investing with $10 if you want! 

Furthermore, some brokerages offer fractional shares, sometimes called “stock slices” as a way to invest.For instance, if you want to buy a share of a stock or index fund that costs $200, but you only have $100, this would enable you to buy half a share.

Is $1,000 a good start for investing?

Reaching your first $1,000 invested in the stock market is an occasion worth celebrating! That’s a thousand dollars that can immediately get to work and start growing.

If you want to earn extra money so you can invest $1,000 every month, think about starting a side gig. Here are 30+ ways to earn an extra $1,000 a month.

Articles related to investing for beginners

If you enjoyed this article on how to starting investing, check out this related content:

• Is Now A Good Time To Invest?
• 28 Investment Terms You Should Know
• Bear And Bull Markets: What It Means For You As An Investor
• 6 Best Investing Websites For Beginners: Research And Analysis
• Real Estate Investing For Beginners: Getting Started

These tips make how to start investing for beginners a breeze!

The best way to build wealth through investing is to get started as soon as possible. You can learn how to start investing today! Even if you are just starting with $20, you can build your portfolio over time.

If you want to learn more and make good investment choices, then consider taking our completely free investing course.

You’ll learn more about how to start investing money for beginners, how to research your investments, and how to pick the right broker for you.

And remember that investing is one part of your overall financial health. There are many other things you should also learn about like saving, budgeting, and managing your money. It all fits together like a puzzle—and the picture it shows is a beautiful financial future!

The post Investing Money For Beginners: How To Start Investing Today! appeared first on Clever Girl Finance.

If you’re searching for the best high paying remote jobs and/or the best remote job sites, you’ve come to the right place! Today, the number of remote jobs has skyrocketed and the shift to working remotely is likely here to stay.

Employees are adapting to working from home and doing so effectively. So, if you’re looking for remote work opportunities, this is a perfect time to do so!

Companies are realizing the large cost savings from having a partial or fully remote team. And the world has fully embraced the change and the possibilities available to you are now truly global.

In this article, we’ll do a deep dive into high paying remote jobs as well as the best remote job sites. We also have a dedicated list of jobs that pay well without a degree.

But first, let’s discuss some of the benefits of working remotely!

Benefits of working remotely

Personally, I have worked remotely on and off for 5 years. I truly love the experience. There are many benefits that come to working remotely. These include:

No commute

We spend a lot of time commuting to work. Some people spend hours on the highway. Others spend their mornings in crowded trains. Whatever the case, working from home gives you your commute time back, which helps make work-life balance more achievable.

Saving more money

Since working remotely, I have saved a significant amount of money. I am making all my meals at home and I’ve discovered that I really can live without my Starbucks latte. Additionally, I have found that I eat much healthier meals at home.

Increased productivity

If you have a good setup at home, you might find that you are more productive. Introverts in particular might find this to be true. At home, you’re in total control of your distractions so chances are, you’ll be more productive there.

Flexible schedule

You may enjoy the flexible schedules that come with work-at-home jobs as well. This means you can start or end their day as you choose as long as you put in the hours or complete your work.

It makes a difference for remote employees who may need to drop and pick up kids off at school or run some errands.

12 Examples of the best high paying remote jobs

Now that you know the benefits of working remotely, you might be wondering which jobs are best. Here’s our take on remote jobs that pay well.

1. Customer service and support

Do you have a knack for dealing with people from different backgrounds? If you do, you may want to consider customer support roles. Almost every company has a customer support team. This team serves as the first point of contact with customers.

As a remote customer service rep, you can expect a salary range between $16 to $21 per hour. In a typical customer service role, you are responsible for answering customer questions and addressing any concerns.

Additionally, you might also help customers with choosing additional services from your company. This is because customer service reps can communicate with customers by email, phone, text, chat, or physical mail.

If you’re in the market for customer support roles, look out for titles such as Customer Service Representative, Customer Happiness Specialist, or Client Services Representative.

2. Virtual assistant (VA)

Are you highly organized and efficient? If yes, you may want to consider becoming a virtual assistant. Virtual assistants are in demand as the world moves to remote work.

Many people hire VAs for a variety of reasons. Leaders in small and large companies need VAs. Entrepreneurs also need VAs as their businesses grow.

There are three skills that are key to excelling as a virtual assistant: organization, planning, and multi-tasking. If you have these, you’ll likely make a great VA!

VAs do a lot of planning things such as travel, meetings, and team events. They also have additional responsibilities that can be really fun such as buying gifts for the team they support.

To get started, you will need to be good with a computer and with the basics of email, Microsoft Word, and Excel. You’ll likely be able to get started for around $18 per hour.

But as you gain more experience, you can charge more. And depending on the industry you are in, virtual assistant roles are remote jobs that pay well!

3. IT support and troubleshooting

The world of IT offers a ton of job opportunities. These include fixing computers, installing software, managing helpdesk tickets and so many more.

Generally, IT jobs require some expertise and training. In large IT companies, training is often provided. However, if you’re flying solo, you can take self-paced courses on sites like Udemy.

There are many companies that are always looking for IT talent. These include SaaS companies, education, health care, and consulting firms. If you’re looking for high paying remote jobs, IT support roles offer an average base salary of $75,876 per year.

Common titles to look out for when searching include help desk analyst, technical support, IT security consultant, systems engineer, systems administrator, and testing analyst.

4. Software engineer

Software engineers are in high demand. It’s notably one of the best high paying remote jobs with an average salary of $117,801 per year as a software engineer.

People in this role spend a lot of time building and growing some of the tech products we’ve grown to love. Their role involves developing software and fixing any bugs associated with a product.

Many industries hire software engineers. These include internet, gaming, IT, consulting, entertainment and so many more. These job postings are in demand today and will continue growing in the future!

5. Web developer and web designer

If you love all things coding, web development, or design may be a great path for you. Web developers build and maintain websites.

They are the brains behind a great looking website and work behind the scenes to ensure that website visitors have a great user experience.

Web development typically takes two forms – namely front-end (building the user interface) and back-end (managing the server). There’s also full-stack development where you tackle both front-end and back-end development.

On a separate note, web design is another related field to web development. However, it is important to highlight that they’re not the same. Web development focuses on the coding aspect and web design on aesthetics.

The two work hand in hand but a web designer typically does not need any coding skills whereas a web developer does.

The Bureau of Labor Statistics reports that web developers and digital designers have a median salary of $80,730 per year. So you can’t go wrong, both are remote jobs that pay well.

6. Content writer

For all the wordsmiths out there, there are many opportunities for you to build a solid career. One way is through content writing.

Today there are billions of websites that are “live” and they all need content. That is where a content writer comes in.

Content writers perform various tasks including creating blog posts, technical papers, email funnels, sales letters, social media content and so much more.

In many cases, writing provides a lot of flexibility because it can be full-time, part-time, or on a freelance basis.

According to the Bureau of Labor Statistics, the median income for a writer is $73,150, making it one of the best paying remote jobs!

The beauty is that there are websites for every niche you can think of! So if you love writing, you can find a role as a content writer that matches your interests.

7. Copy editor

Do you love writing and reading? Then, you may enjoy being an editor. Copy editors check facts, spelling, grammar, and punctuation. They also make sure the materials are easy to read and understand.

Copy editors work in online publications editing magazines, newspapers, and books. In addition, there are many remote work opportunities editing blogs and digital marketing copies.

Editors come from diverse backgrounds such as journalism, communications, marketing, and other related industries. But you don’t need a bachelor’s degree to become one. It’s one of the remote high paying jobs that you can get without a degree.

The Bureau of Labor and Statistics reports that copy editors make about $34 an hour.

8. Educational video instructor

The education and training niches are growing faster each year. In the past, most learning took place in person, but today, education is shifting online.

If you love teaching people new concepts, you can find a remote role as an educational video instructor. It’s another one of the best high paying remote jobs with an average salary of $52,513 per year.

Companies use video tutorials to demo their products or to answer FAQs. They will often hire a video instructor to do this. If you’re comfortable in front of a camera and love teaching, this could be the perfect next gig for you!

9. Social media manager

More than half of the world now uses social media, naturally, businesses also use it to connect to their audience. That’s where social media managers come in. In this role, you’ll create social media posts, engage with the audience, and more.

Managing and growing a social media presence is a sought-after skill, which makes it one of the best paying remote jobs. You can make a salary range anywhere from $24 to $47 an hour as a social media manager.

Learn how social media platforms like Facebook, Instagram, Pinterest, or Twitter work and you can start offering it a service.

10. Project manager

Project management is another one of the remote high paying jobs that’s becoming common in many sectors like software development, digital marketing, and research.

A project manager’s main responsibility is to ensure the completion of a company’s project. Some of the tasks for the role include developing a detailed plan, defining the scope of the project, and coordinating activities with team members.

Conveniently, most of the tasks can be done remotely. Project managers make around $55,000 a year. Not bad at all, right?

11. Video editor

Brands, companies, and content creators use videos to attract customers and audiences online. So, with creativity and the necessary technical skills, you can be a video editor and snag one of these remote high paying jobs.

Video editors use software to edit video footage into visually appealing final product. The videos are used in websites and social media platforms like YouTube.

Additionally, there are remote work opportunities for video editors in marketing agencies, digital publications, movies, and television. In this role as a video editor, the average income is at $59,523 per year.

12. Data analyst

Businesses track and compile various data to measure sales, inventory, and so much more. It’s the data analyst’s job to make sense of it all.

Data analysts review and evaluate data to simplify them. Then, the analyst creates a report that companies use to make important business decisions. Now, you see why data analysts is one of the best high paying remote jobs with an average yearly salary of $80,429.

Analysts typically have a bachelor’s degree in Computer Science, Mathematics, Engineering, or any related study. Those who have specialization or a master’s degree command a higher pay, of course. Most work in IT, retail, pharmaceutical, and finance.

Expert tip: Apply to remote jobs the right way

The process of finding and applying for high paying remote jobs is a little different than getting a regular job. As you can imagine, job sites get lots of applications for a single position.

First, make sure you’ll looking for postings at remote job sites. Then, tailor your resume for remote jobs. Mention previous remote or hybrid job experiences and highlight skills that show you can be an effective remote worker.

It doesn’t hurt to update your LinkedIn profile to show your openness for remote work opportunities either.

12 Best remote job sites

We’ve outlined examples of the best high paying remote jobs but you may be wondering what the best remote job sites are.

The internet is a hive of activity. Undeniably, some searches for jobs and opportunities will turn out to be scams.

To prevent that, we’ve put together a list of the best remote job sites you can visit to find remote work today! Check it out below.

1. FlexJobs

Since 2007, FlexJobs has been one of the best remote job sites to find work-at-home opportunities. The platform is thoughtfully curated and features legitimate remote jobs. Not only does the site show remote jobs, but it also shows freelance work and onsite gigs.

FlexJobs fully vets remote work opportunities before posting them so you won’t have to worry about scams. In addition, they closely monitor new postings to ensure you’re getting access to the best jobs available in the market.

2. Remotive

True to its name, Remotive’s mission is to help tech professionals work remotely. It is one part job board, one part newsletter, and one part community.

You can easily filter the remote jobs list by category and key experiences required. Once you log on to the site, you will see that the company refreshes content daily. Bonus perk? Their site is free.

3. Hubstaff Talent

Hubstaff Talent is a completely free way for companies to find remote talent across the globe. There are thousands of clients that visit the site in search of high-quality freelancers.

Gigs can be full-time, part-time, or fixed price. This site is great whether you’re looking for a full-time job or for a side hustle.

4. We Work Remotely

With over 13,000 jobs posted, We Work Remotely is the largest remote community in the world. The site has over 2.5 million monthly visitors per month and showcases jobs spanning many fields such as customer support, marketing, and programming among others.

Companies such as Google, Amazon, and Basecamp all use the site to find good candidates.

5. Jobspresso

Unlike many sites that aggregate job listings, Jobspresso takes a completely different approach. It’s one of the best remote job sites because the company handpicks all the jobs posted in their listings. As a result, you can rest assured that the jobs are real.

One reviewer on their site said that Jobspresso “has curation down to a science.” Their positions are from all industries so there is something for everyone!

6. Upwork

Upwork is a great freelancing platform where job seekers can find diverse remote jobs that pay well. To start your job search, you’d need to create a profile.

Make sure to highlight your skills and years of experience and show your portfolio. Then, search their marketplace for the work you’re looking for.

It’s free to sign up and create a profile on Upwork. But it’s a full-service platform where you can secure jobs and receive payment. And they take a cut out of your earnings for it.

Don’t let that deter you, Upwork is still one of the best remote job sites to find your first work-from-home job.

7. Virtual Vocations

Virtual Vocations is a job board that features over 45 work-from-home career fields from accounting to writing. It’s a family-owned company run by an entirely remote team. Virtual Vocations prides itself on providing human-reviewed online job openings.

They also share great tips and resources to help in your job search on their blog. All of which makes them one of the best remote job sites in our book.

8. Amazon

Amazon is now the largest online marketplace in the world. The company sells goods across every category imaginable from books and movies to outdoor items.

According to its LinkedIn page, the company employs over 415,000 people. If you love retail and e-commerce, Amazon could be a great place to work!

Amazon offers a wide array of jobs – full-time, part-time, and remote positions. Jobs range from operations and order fulfillment to IT and web services roles. See Amazon’s current remote job openings here.

9. Pearson

Pearson is an international learning company with headquarters in London, UK. The company offers educational training materials for those taking standardized tests.

At Pearson, remote work is available to 51% of the company and that number is likely higher now due to COVID.

Roles are on a full-time, part-time, or seasonal basis. Although the core mission of the company is education, many of the roles available cover multiple disciplines.

For any prospective job applicants – the leadership team values communication and technology skills!

10. Cybercoders

Cybercoders is a top recruiting company headquartered in Irvine, California. The company provides recruiting services to professionals in accounting, engineering, finance, legal, sales, operations, tech, and more.

Their advanced technology and efficient recruiters help to quickly match candidates to the right job opportunities.

The company prioritizes speed and efficiency in its recruiting process and is definitely worth checking out!

11. Kforce

A top staffing and recruiting company is Kforce. The company has been around for 45 years and offers remote flexibility to its staff.

Kforce provides recruiting solutions to companies in finance, healthcare, and government and can be a great place to grow a career in recruiting.

12. Randstad

Randstad, another well-known staffing agency, is a truly global company. With close to 5,000 branches worldwide, the company is now the world’s second-largest staffing company.

Its clients are from diverse industries and include numerous Fortune 500 companies.

What is the highest-paying remote salary?

When it comes to the highest paying remote salaries, it’s safe to say that there are many remote jobs that pay well above $100,000. Of course, salaries depend on many factors such as qualifications, experience, the industry, and the job itself.

Some of the top highest paying remote jobs include jobs in IT like software engineers and web developers, coders or data analysts.

How can I make $100,000 a year working a remote job?

If you want to make $100,000 a year, the first step is to research industries and jobs that pay as much. For instance, remote jobs in marketing, tech, and healthcare offer high salaries and great benefits.

Next, learn the skills necessary to get the remote job you want. In addition, consider taking additional certifications, developing expertise in one area, or getting a master’s degree to have a competitive advantage.

What is the highest-paying remote job with no degree?

Salaries for many high paying remote jobs depend on a person’s expertise and how much a company values those skills.

Job positions like virtual assistants, customer service representatives, content writers, and social media managers require no degree and can earn a very decent income. Rest assured, you can get a remote high paying jobs without a degree.

What are the best sites to apply for remote jobs?

The best sites to apply for remote jobs include Flexjobs, Upwork, Virtual Vocations, Hubstaff Talent, We Work Remotely, Jobspresso, and Cybercoders. You can also try Amazon, Pearson, Kforce, and Randstad.

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Find your next high paying remote job today!

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So you’re newly engaged. Congratulations! After you’ve announced your relationship status and had your fair share of celebrating, it’s time to start planning for your big day with a wedding budget breakdown!

This means putting together a wedding budget spreadsheet with percentages and categories.

It’s no secret that weddings are expensive. And you’ve probably already looked up “planning a wedding on a budget” to see what’s possible.

While you probably laid out the wedding of your dreams in your mind — the amazing venue, the designer dress, those gorgeous florals — it’s important that you set a realistic wedding budget to ensure you don’t derail your long-term financial goals.

Why a wedding budget breakdown matters for your finances

Lending Tree found that 30% of engaged couples will leverage debt to fund their wedding. That’s definitely not a good way to start out your finances in marriage.

Being clear on what you can truly afford will help you avoid being a part of those statistics. Plus, you can still have a wedding on a budget that’s fun and elegant.

To avoid your wedding day becoming overly expensive, here are some guidelines to help you create a realistic wedding budget while still keeping your long-term financial goals intact.

Tips for creating a realistic wedding budget breakdown

Wedding Wire’s Newlywed Report found that, on average, couples expect to pay about $16,000 on their wedding but instead spend closer to $29,000! Why? Most couples set a rough budget before doing any research, so they underestimate how much the venue or catering costs (sometimes by a lot).

Just like your monthly budget, you’ll need to make a plan for how to spend your money on your wedding.

It’s so easy to go overboard trying to plan your destination wedding and obsess over tiny details that add unnecessary costs. This is why it’s essential to make a wedding budget spreadsheet.

You should also focus on what matters to you and how much you’re willing to pay for specific things. Do this instead of just figuring out the average cost of a wedding and assuming yours will be the same.

So when you’re searching the internet with the words, “planning a wedding on a budget”, know that all results will be different and based on individual experience.

You CAN have a beautiful wedding without hurting your financial health. A realistic budget helps you do just that.

1. Determine how much of a wedding you can afford

As you outline your wedding budget checklist, it’s a good idea to first sit down with your significant other to discuss your long-term financial goals and what amount makes the most sense to pay for your wedding based on those goals.

Having this conversation will allow you both to set realistic expectations and avoid unnecessary disagreements down the line. It’s also important to have a conversation with your families if you will be receiving financial support from them to pay for your wedding.

Some questions you’ll want to answer together include:

• Will you be getting financial support from your parents or family? If so, how much?
• Are you and your partner paying for the wedding yourselves, or are you contributing to your wedding expenses in addition to your family’s help? If so, how much will you each be contributing?

Once you know what these numbers are, you’ll want to add them up and use that final number as the basis for your wedding budget breakdown.

2. Layout your wedding guest list size

Determining your wedding guest list size is an important step in creating a realistic budget breakdown.

The number of guests you invite can significantly impact your overall wedding expenses, as each additional guest adds to the cost of food, drinks, favors, and other wedding-related items. 

To determine your guest list size, start by creating a preliminary list and consider factors such as:

• Close family
• Extended family
• Family friends
• Your friends
• Plus-ones

And for the budget-conscious, you may want to limit the guest list to just your immediate family and closest friends.

3. Determine the time of year for your wedding

Time of year is a factor often overlooked when setting a budget for a wedding.

But wedding costs often vary based on the season, with peak wedding months, such as spring and summer, having higher prices for venues, vendors, and other services. 

Alternatively, off-peak seasons like fall or winter may offer more budget-friendly options. 

So as you prepare your wedding budget, consider the weather, availability of venues and vendors, and any potential discounts that might be available during specific times of the year. 

4. Choose a venue or destination (One of the biggest costs in a wedding budget breakdown)

And we can’t forget one of the biggest, if not the biggest, wedding expenses: the venue.

The venue not only sets the tone and ambiance for your special day but also plays a major role in your budget breakdown. 

Different venues have varying price points, so it’s essential to research and compare options, such as:

• Size
• Location
• Indoor or outdoor space
• Amenities (i.e., restroom, dressing rooms, kitchen, dance floor)
• Included services (i.e., venue coordinator, serving staff, cleaning, set up)
• Accessibility 

Keep in mind that popular or sought-after venues often come with a higher price tag. But if you’re open to alternatives, you might explore less conventional venues, such as public parks, community centers, or even hosting your wedding at a private residence.

Additionally, destination weddings can provide unique experiences but may require additional costs for travel and accommodations. 

5. Download our free wedding budget breakdown spreadsheet

The way to stay on budget is to set an amount and track your expenses throughout the wedding planning process. As you get started with planning, here’s a great free wedding budget spreadsheet to help you lay out the costs we mention below! 

Click the image below to download this worksheet in PDF & Excel formats!

Wedding budget breakdown example (In percentages)

After determining your “number,” it’s time to set up a typical wedding budget breakdown. Let’s say you plan on spending about $20,000. (This doesn’t include the cost of the honeymoon.)

Remember this is just to use as an example. You may decide to spend more or less on your big day.

Below are different categories that you’ll want to include in your budget. We’ll go over them in detail as well as discuss the average budget percentage you could allocate for each one.

Reception: 40% to 45% (The largest cost in your wedding budget breakdown)

The main category on your wedding budget spreadsheet will be for the reception. The cost of the reception will likely take up the bulk of your budget, which is about 40% to 45%. Reception costs will include the cost of the venue, food, wedding cake, rentals, etc.

So, to get the wedding budget breakdown, you would take your total budget of $20,000 and multiply it by 40% to 45%, which is between $8,000 and $9,000.

Ceremony: 2%

Calculate about 2% of your wedding budget breakdown towards ceremony costs. This includes your officiant and marriage license fee.

Some people plan to have the ceremony at the same location as the reception. So the venue is included in your reception costs mentioned earlier.

Otherwise, you will need to pay for a ceremony venue, which is not included in this percentage.

Wedding attire: 8% to 10%

A lavish wedding dress, tuxedo, makeup, and hair can get costly. Not to mention accessories! It usually runs between 8% to 10% of your wedding budget breakdown. So, based on our example budget, the total cost would be between $1,600 and $2,000.

Wedding rings: 3%

When creating your wedding budget checklist, don’t forget to include your wedding bands. Of course, this isn’t the cost of the engagement ring; that’s a whole other expense.

But the wedding bands are a symbol of eternal love that represents your union, so it’s an essential part of your checklist! The average is about 3% of your budget if you’re frugal.

Photography and videography: 12 to 15%

The next biggest expense in your wedding budget breakdown is the photographer and videographer. You can plan on this costing about 12% to 15% of your budget if you’re very frugal, which would be about $2,400 to $3,000, though the cost can be much higher.

Try to find a photographer with excellent reviews to ensure they capture the memories of your big day in the best way possible!

Flowers and decorations: 7% to 8%

Whether you want a beautiful display of red roses or twinkling lights adorning the venue, the average cost for flowers and décor is about 7% to 8% of your total budget. So include about $1,400 to $1,600 in your wedding budget spreadsheet for decorations and floral arrangements.

Entertainment and music: 6% to 7%

Are you thinking of a DJ or a band for your wedding? Either one has different costs and expenses. However, you can block off about 6% to 7% or $1,200 to $1,400 in your wedding budget spreadsheet for entertainment.

Wedding invitations and stationery: 3%

Invitations, stationery, and menus, oh my! There are many types of wedding stationery you will need to account for on your wedding budget checklist.

Between save-the-date cards, wedding invitations, ceremony programs, and more, this will cost you about 3% of your budget. Be sure to check your guest list to see how many invites you’ll need and calculate costs from there.

Transportation: 2%

If you decide to offer transportation to your guests to ensure everyone arrives on time, it will cost you about 2% of your budget in fees. So be sure to allocate around $400 or so if you go this route. You can also only supply transportation to your wedding party to cut back costs.

Bridal party gifts: 2%

Another expense to keep in mind for your wedding budget breakdown is bridal party gifts. You may opt to get keepsake gifts for your guests, too, so be sure to budget accordingly. It will run you about 2% or around $400.

Wedding insurance: 2%

Don’t let unexpected events ruin your big day. Be sure to add wedding insurance to your wedding budget spreadsheet! The insurance covers lost pictures, deposits, rings, and other items.

At the very least, be sure to get liability insurance to cover accidents if they were to occur. These policies can run around 2% of your budget.

Wedding planner: 10% to 15%

Hiring a wedding planner can help alleviate the stress of wedding planning and make sure things run smoothly on your big day. 

A wedding planner can assist with vendor coordination, timeline management, and overall event design.

The cost of a wedding planner typically ranges from 10% to 15% of your budget, which amounts to $2,000 to $3,000 based on our example budget.

Wedding Favors: 1% to 2%

 Wedding favors are a thoughtful way to thank your guests for celebrating your special day with you. 

These small tokens of gratitude can range from personalized keepsakes to edible treats. 

Allocate about 1% to 2% of your budget, which amounts to $200 to $400 based on our example budget, for purchasing or creating wedding favors. 

Miscellaneous and unplanned expenses: 2 to 5%

It’s also a good idea to assign 2% to 5% or so of your total budget to cover any miscellaneous, unplanned, or surprise expenses. So a buffer of about $400 to $1,000 should be set aside for this category.

Examples of things that could come up are deciding you need a day-of wedding planner or opting for an extra hour for the photographer. These are expenses you may not be aware of until closer to the wedding.

Remember when creating your wedding budget breakdown that costs will vary depending on the wedding location, time of year, day of the week, etc., but you can find average wedding costs online to get a general idea.

17 Ways to leverage your wedding budget breakdown for the most savings

It’s natural that your big day reflects your tastes. Fortunately, that doesn’t require an arm and a leg, but it does require some extra work on both of your parts. Here’s what you can do to get more out of your wedding budget without actually spending more.

1. Negotiate with vendors to lower your wedding budget

The first tip that might seem obvious is negotiating prices and contracts with the people you employ for your wedding.

Caterers, photographers, florists, and DJs will often work with your specific budget. Be willing to negotiate and walk away if you cannot afford a rate being offered to you.

For example, ask your caterer for sample menus and prices per person, then see which areas you can cut back on (i.e., perhaps you only need two passed hors-d’oeuvres instead of five).

It will help you to go back and negotiate the price down for their services. Photographers, florists, and DJs will also usually be willing to come down on prices to close the deal. It can save you big bucks or can free up money on your wedding budget checklist for other categories!

2. Don’t go crazy with expensive wedding stationery

Letterpress, gold foil, jeweled boxed, feathered… It’s easy to go crazy over your wedding stationery, and those costs can add up fast.

Some fancy letterpress invites go as high as $5 to $7 per invitation — yikes. Instead, choose to print simple, less costly invitations; you’ll be amazed at the beautiful options that exist.

One of my favorite online printing presses is Minted, where you can choose beautiful wedding invites for an affordable price.

3. Skip the catered, sit-down dinner to maximize your budget

Skipping the fancy catered dinner is how to plan a wedding on a budget easily. Most wedding venues offer in-house catering services because they make a ton of money on the huge markups involved.

If you can find a venue that allows you to bring your own caterer, you can find one that not only makes great food but also fits your budget.

A frugal alternative is to choose a family-style dinner with shared platters that can be passed around the table. Doing this can save you up to 20% off your catering cost.

Although formal catering is nice, it’s definitely among the pricier options. A family-style dinner creates a warm atmosphere for people who would like to have smaller, more intimate weddings.

Another consideration? Dinner is typically the most expensive meal when it comes to planning a wedding on a budget. Brunch or lunch is a somewhat lighter meal, and people tend to drink less alcohol in the daytime, so you can save a ton of money there, too.

4. Consider a second-hand dress

If you’re a bride who finds that your dream dress is out of your budget, try finding it online from second-hand wedding dress sites such as OnceWed.com or StillWhite.com. You can save up to 75% off wedding dresses that have been pre-loved, dry cleaned, and preserved for their next owner.

Another alternative is renting out formal wear. You can rent a dream wedding dress instead of dropping thousands of dollars to wear it for one occasion.

The same goes for the suit for the groom. Suits can also be rented and it’s a great way to cut costs on materials that do not have long timelines in terms of how often they will be worn. Buying preowned or renting is a big part of having a wedding on a budget!

Alterations and accessories can be costly as well. But you can still add a personalized feel, you can sew on lace details, beads, or appliqués to a simple dress, or design and make your own veil or hair accessories.

5. Get married any day but Saturday

Saturday is the most expensive day to get married, especially in the summer and fall. Why? Because everyone wants to get married on Saturday!

You may be able to book your dream venue at a considerable discount (anywhere from 10% to 40% off) by getting married on a Sunday or a weekday.

And if you choose a date that is off-peak (like in the winter or early spring), you might be able to save even more! Opting for a cheaper day to get married is how to plan a wedding on a budget without much effort!

6. Serve signature cocktails to save on alcohol costs

Serving signature cocktails is an awesome way to show your personality at your wedding. It helps you manage the amount of money you spend on alcohol (if you choose to serve alcohol) because the varieties available are limited. You’d still be serving great drinks, though.

7. DIY your decor and use seasonal items

An easy way to have a wedding on a budget is to do your own decor! Take advantage of the talents your friends, bridesmaids, and family may have! Enlist their help in creating your wedding ceremony and reception decor.

Pinterest is great for getting inspired, and you can find a ton of great decor items from your local craft store at a fraction of the cost that you’d pay to a florist or event designer.

And since floral arrangements can be a huge budget-buster, consider buying flowers, boutonnieres, and corsages in bulk from Sam’s Club and Costco. Doing so can save you thousands when compared to working with a florist.

Figure out your wedding colors, then watch a few YouTube tutorials on how to put together an arrangement. It’s totally doable!

8. Choose a cheaper photography package

As you saw in the wedding budget breakdown, the second most expensive cost is the photographer.

Many people are very particular about their wedding photography, so if there is a photographer that you absolutely must have for your wedding, consider choosing their cheapest photography package.

Do you really need a photographer at your wedding for 10 hours when your friends and family will also be taking pictures as well? Once people start dancing, 30 minutes of those photos are good enough, as, after that, it’s just a bunch of repetition. Plus, those photos rarely make it into the wedding album.

9. Skip the fancy wedding cake

Everybody loves cake, but that doesn’t mean you need to splurge on a three-tier wedding cake. An elaborate confection can set you back hundreds of dollars. And more often than not, guests are having too much fun to even notice what kind of cake you served.

Save money by opting for a single, six- to eight-inch tier cake atop a Styrofoam base. If you want to serve cake to your guests, purchase a few sheet cakes from Costco or your local bakery for about $40 apiece. Your guests will never know the difference, and you can still get those glamorous cake-cutting photos.

10. Forget the wedding linens or bring your own

If your venue has wooden tables that don’t need to be covered, opt for a rustic look without linens. You could save between $500 and $1,000.

If the provided tables need to be covered, buy a pretty fabric in bulk online or at your local craft store and DIY your own linens for major cost savings. Online tutorials like those on YouTube can help you get started on customizing your own linens.

11. Ask a friend to officiate

You can save between $200 and 400 by asking a friend to officiate your wedding. A friend can easily get ordained online for around $50.

Also, if you don’t feel comfortable with asking a friend to officiate for the first time, asking someone you are close to who has experience with officiating weddings is another alternative.

12. Consider a smaller wedding to save money

Simply opting for a smaller wedding is how to plan a wedding on a budget. Small and simple weddings can be just as beautiful as large fancy weddings.

The big difference is the amount of money that you’ll save. At the end of the day, your wedding celebration is only for one day, and your marriage is for a lifetime!

So it makes more sense to step into your marriage financially sound than to blow a ton of money if you cannot really afford it for a one-day wedding party.

13. Extend your engagement timeframe

Assess the wedding budget spreadsheet you’ve created. If it seems like paying for your wedding will be a stretch, consider extending your engagement. It’s a great way to lower the amount you’ll need to save each month while still enjoying that exciting planning phase.

14. Track your spending in your budget breakdown

It’s important to track your wedding spending to ensure you’re staying in line with your budget. Use your wedding budget spreadsheet to account for all expenses. Little expenses like hair accessories, place cards, and cake toppers tend to add up, so use caution!

15. DIY and get creative

And here’s some great news — there are tons of clever ways you can save on your wedding. From DIY options to simply re-thinking the day you exchange vows, today’s weddings can fit nearly any budget.

16. Plan for unexpected and last-minute costs

Another smart wedding budget trick is to set aside money for unexpected expenses and last-minute costs that may arise.

Despite your best efforts to account for everything, there might be unforeseen expenses like alterations to your dress, additional decorations, or unexpected vendor fees. 

To plan for unexpected costs, consider allocating a buffer amount—around 10% to 15% of your total budget—to account for unforeseen expenses.

17. Get appropriate insurance

Many forget about wedding insurance when planning their big day, but it can provide valuable protection and peace of mind.

While no one wants to think about potential mishaps on their big day, having appropriate insurance coverage can help mitigate financial losses and alleviate stress.

Wedding insurance typically covers a range of scenarios, such as cancellation or postponement due to extreme weather, illness, accidents, or venue bankruptcy. 

And some policies also offer liability coverage in case of accidents or property damage during the event. 

Expert tip: Take your time while making wedding budget decisions

The wedding planning process can be overwhelming. So many decisions to make, so many people to talk to!

First off, take your time. Second, trust that you can make the smart decisions with preparation and right information.

Lastly, be yourself. You don’t have to put yourself in debt to have the wedding of your dreams. Get clear on what you want and use the resources you have here.

Create a wedding budget checklist. And make sure to track your spending on a wedding budget spreadsheet or a wedding budget calculator.

How can you save for your wedding and also keep your emergency fund intact?

Once you know what things will cost you and have your wedding budget checklist squared away, it’s time to start saving. Build a line item into your existing budget to start putting money aside for your wedding.

Keep in mind that you may need to forgo certain things to meet your big day’s savings goals. Things like daily coffees, gym memberships, vacations, shopping, etc., might need to be placed on the back burner while you save for your big day.

If you choose to put your long-term savings on hold while you put aside money for your wedding, it’s important to keep your emergency fund intact. Because life happens regardless of whether you are planning a wedding on a budget or not. Your emergency fund should not be used toward your wedding expenses.

What is a reasonable budget for a wedding?

A wedding budget depends primarily on the personal preferences of the couple, the location of the event, and how many people are on the guest list. All of which can vary widely from person to person.

So a reasonable budget can range from a few thousand dollars to tens of thousands or more. It all depends on you.

The budget should be realistic and manageable for you and your partner, taking into account your financial situation and priorities.

Is $5,000 enough for a wedding? 

While $5,000 can be a tight budget for a traditional wedding, it is absolutely possible to plan a beautiful and meaningful wedding with $5,000. 

You can do this by leveraging cost-saving strategies, such as opting for a smaller guest list, choosing a non-traditional venue (e.g. a backyard or public park), or DIY-ing certain elements (e.g. decor and food).

Is $10,000 a good amount for a wedding?

With todays resources and DIY options, you can work with any budget. That said, $10,000 is a good amount for a wedding.

The key is to be realistic with your expectations and spend only on what’s important to you. Take time to figure out how envision your special day and keep that in mind throughout the wedding planning process.

How do you budget for a $30,000 wedding?

As it happens, $30,000 is the average cost for a wedding nowadays in the US. So, you are in a good place to have a traditional wedding if that’s what you’re going for.

Put together a wedding budget spreadsheet using the percentages and categories mentioned in this article. You can take out some expenses and adjust the cost for others based on your priorities, of course!

Make sure to track your spending with a wedding budget calculator.

What should be included in a wedding budget spreadsheet?

A comprehensive wedding budget spreadsheet should include various categories and items to track spending. 

Here are some essential elements to include:

• Venue and catering costs
• Wedding attire (bridal gown, groom’s suit, accessories)
• Photography and videography
• Flowers and decorations
• Entertainment and music
• Stationery (invitations, save-the-dates, programs)
• Transportation
• Wedding cake
• Officiant fees
• Wedding rings
• Hair and makeup
• Wedding favors
• Wedding planner fees (if applicable)
• Marriage license
• Miscellaneous expenses (tips, unforeseen costs, contingency fund)

Allocate a realistic budget for each category and track your actual spending against the budgeted amounts. This will help you stay organized and make informed decisions.

Articles related to planning a wedding and marriage

If you enjoyed this article on creating a wedding budget, check out this related content:

• How Much Does The Average Wedding Cost?
• How To Stick To Your Destination Wedding Budget
• Keys To A Successful Marriage: The Money Edition!
• Finances In Marriage: How To Make It Work In 9 Steps

Leverage this wedding budget breakdown to save on your dream wedding!

The wedding budget breakdown can serve as a template for your customized wedding budget. You don’t have to spend the average amount on a wedding if you don’t feel it’s best for your finances. Remember, your marriage is for more than just one day of celebrations!

It’s important to be financially smart about your wedding costs so you don’t impact your financial future. Use your wedding budget checklist to ensure you remember all of your expenses and financially prepare for all of the costs. You can also get help wih planning your dream wedding on a budget with our free course!

The post A Wedding Budget Breakdown + Tips To Plan Your Dream Wedding appeared first on Clever Girl Finance.

For many people, budgeting is just not any fun, and it means limits or lack of or even punishment. But if you choose the right budgeting method, you can be financially successful, and budgeting doesn’t have to be such a chore. Find out about the best budgeting methods so you can decide which one to use!

I personally prefer the word “plan” to the word “budget” because it doesn’t sound so constraining. But a budget broken out into budget categories in some form is really important for your financial success.

Ever heard the saying from Benjamin Franklin, “Failing to plan is like planning to fail”? Well, if you don’t plan, you can’t win and your budget is there to help you win.

That said, the process of budgeting doesn’t have to be difficult or complicated, either.

There are several advantages and disadvantages of budgeting, but it’s generally a positive thing. You just need to create a system that works for you. And this means the right budgeting method.

In this article, you’ll learn all about the various types of budgets and how to win with your money! But first, let’s discuss why understanding the different budgeting methods even matters.

Why it’s important to understand budget methods

There are some pretty solid reasons why you should understand and be using some or one of the methods of budgeting. It helps keep your spending in check, tracks your expenses, and teaches you to control your money — and not have it control you!

It’s also the first step in helping you build wealth.

Having a budget allows you to enjoy life without the stress of how to pay for it later. Because “later” rarely comes. Paying for things in the present instead of the future allows you to truly enjoy yourself and live the life you want.

I was able to save $100,000 in just 3 years by making a budget and sticking to it. And you can find out how to save 100K, too! Imagine what you can accomplish with a little planning.

People will often allow their emotions to cloud their judgment when it comes to planning their finances.

However, if you look at your money objectively for what it really is, a tool, then it’s easier to make your plans! Once you decide what your priorities are, the different budgeting methods you choose should reflect them.

4 Different budgeting methods to consider

The method you choose is entirely up to you; the most important part is picking a style that works for your life. Trust me, even if you currently hate budgeting and need a better budgeting system, there’s a style out there for you!

Finding what works for you is the most important step because not everyone’s brain processes information the same. You may like one of these methods or a hybrid of a couple of them. You may choose to start budgeting weekly or prefer a biweekly budget or monthly.

The most important thing is just to do it. If one doesn’t work, try different types of budgeting methods. That said, below are four different ideas that you can try.

1. Envelope or cash system

The cash-based budgeting system is simple. You subtract your expenses from your income and then put the amount of each expense into its own envelope. These envelopes are your categories.

Using cash may also make it easier to stick to your budget. Studies have shown that you spend less when using cash. But you don’t have to use cash for all of your bills when using the envelope system.

You can set up the money for your big bills using a digital envelope system. Then, track them through a budget worksheet or an app. Then, put actual cash for your smaller expenses or day-to-day transactions in actual physical envelopes.

The cash envelope system works best for categories which you can use cash for on a daily basis. So, things like clothes, food, eating out, fun, kids’ expenses, etc. Do not make it overly complicated, or it will be hard to follow and stick to.

Learn more about getting started with the cash envelope method. And be sure to check out our reviews of the best cash envelope wallet options.

2. Percentage breakouts

Another way to examine your budget is to break down your household income into percentages. Once you do this, you can organize your spending and savings accordingly where you allocate percentages to your:

• Needs
• Wants
• Savings and/or debt.

Keep in mind that the percentage allocations in your budget can change and that’s ok. Remember this is YOUR budget, and you can choose to spend less on one category to put more in another, like savings or debt repayment if needed.

So, for example, you can select a 35/30/35 breakout, a 35/35/30 breakout, or even a 25/25/50 breakout. The goal is to set percentage breakouts that make sense for you.

Just be mindful of how much of your income you spend on housing alone. A good rule of thumb is to keep your housing costs to less than 30% of your income.

Otherwise, you won’t be able to put as much money towards your other goals. Things like saving and investing or becoming debt-free.

It’s helpful to maintain a budget worksheet for this method, too. Using one of the best budget templates or a worksheet is helpful to see where your money is going. It can help you create your budget easily from month to month.

Here are some common percentage budgets you can try:

70-20-10 budget

The 70-20-10 budget method helps you break your income down as follows: 70% to your expenses, 20% for savings, and 10% to pay off debt (or for charitable donations).

Included in your expenses are essentials like groceries, personal care, and housing costs, but also non-essentials like gifts for weddings or fun money. Then you save 20% towards your goals, including your retirement investing. Last, you’ll pay off any credit card debt or personal loans and give to others with the remaining 10%.

50-30-20 budget

The 50-30-20 rule is fairly straightforward. You spend no more than 50% of your income toward your needs and essentials (things like housing expenses, rent payments, home repairs, transportation costs and car payments, your food budget and groceries, etc.) It also includes debt repayment.

Next, no more than 30% of your income goes toward wants and non-essentials (cable, entertainment, subscriptions, vacations, presents for an anniversary or birthday, etc.)

Finally, at least 20% of your income goes toward savings (your retirement account, emergency fund or rainy day fund, health savings account, saving for college tuition, etc.)

It’s one of the easiest methods of budgeting because it works for a variety of incomes and allows you to save and spend freely.

60-30-10 budget

The 60-30-10 rule is a very unique budgeting method. It works best if you have either a very high income, low expenses, or both. 

With this approach, 60% of your money goes toward savings, debt payoff, and investments. Then, 30% is budgeted for your essential costs, like your mortgage, renters insurance, property taxes, school supplies, food, etc. Last, 10% is left over for whatever you want to purchase, like birthday gifts for friends, dinners out at restaurants, etc.

Even if you can’t use the 60-30-10 budget yet, you can always use a percentage method that allows you to save more. Maybe try for 30 or 40% savings to start, and work up to saving more over time.

80-20 budget

The 80-20 budget is a simple approach that can be very effective. 20% of your money is for your savings goals. The other 80% is for your essentials and discretionary spending. 

So you would budget 20% of your wages towards your emergency fund, investing, and other goals. Meanwhile, you divide the rest for your expenses and anything else you want or need to buy.

For example, essentials like rent, homeowners insurance, groceries, life insurance, internet, etc., are paid for from the 80%, as well as discretionary spending like Netflix and movies, tickets for events like a concert, or gifts for birthdays.

30-30-30-10 budget

Another common percentage is the 30-30-30-10 budget. It’s a method that makes a lot of sense if you want to be careful about how much money you spend in important categories.

With this approach, you spend 30% on your housing costs. Another 30% goes towards your savings goals, like retirement and paying off any debt you have.

In addition, another 30% pays for your other essential expenses like internet and groceries. Last, the final 10% is for discretionary spending.

A budget like this means you’ll be careful that your housing costs don’t get too high, which can be helpful, and you’ll save a significant amount.

3. The reverse budgeting approach

As the name implies, reverse budgeting is the opposite of most methods. With most budgets, you subtract your expenses from your monthly income, but the reverse budget is different. It is also known as the “pay yourself first” method.

In this method of budgeting, you focus on savings and financial goals, such as saving a certain amount of money each month, in addition to paying your essential bills, like mortgage payments and utilities.

Then, as long as you meet your monthly goals and pay your bills without exceeding your income, you can do what you like with the money leftover. Reverse budgeting can be one of the best types of budgeting methods because it’s easy, and you don’t have to overthink your money goals too much.

4. Zero-based budgeting

Another form of a budget is the zero-based budgeting example. Zero-based budgeting is the method that Dave Ramsey advocates using. Basically, a zero-based budget is planning for every single dollar in your budget.

So, instead of having $X amount left over at the end of the month, you have $0 left (on paper anyway). When you are planning out your budget, you account for everything you can think of in the budget so that every dollar has a purpose.

You won’t really have zero dollars at the end of the month because you have accounted for different savings funds in the budget. The method is effective because it creates intentionality with every dollar so that what is “left” doesn’t disappear every month.

So no matter what you spend your money on, from essentials like health insurance and debt payments to discretionary spending like going to a concert or money for a hobby, you plan it in advance with the exact amount of money you need.

Budgeting using a spreadsheet vs. an app: Which is best?

Some people love an organized chart for their money — they don’t have to worry about bank security or what’s happening with their personal information. And using a budget spreadsheet allows them to get really close to their numbers.

Do you like this approach but are worried about being able to access it when you’re not home? Google Drive is free and makes it easy for you to upload your budget worksheet for easy access on your mobile devices.

Apps, on the other hand, can make it really simple to budget, especially if you can connect your bank accounts to them so your transactions can be tracked automatically. These days, most apps have extra levels of security.

But sometimes, there can be delays in transaction updates. And apps are not always as intuitive when it comes to categorizing transactions, which will require you to spend some time setting things up.

That aside, for the most part, all you’ll really need to do once things are set up is check in frequently. It will help you ensure your transactions are tracked correctly. You can also set up alerts to keep you on top of your budget.

Whether you choose a budget worksheet or an app, you can set up your budget to be reflective of any of the above methods. Be sure to check out our example of a budget.

6 Tips for succeeding with your chosen budgeting method

Budgeting doesn’t have to be scary and overwhelming. Once you get the hang of doing it, it gets easier and easier every month to have organized finances. Following these simple steps will help you streamline the process and actually stick to your budget.

1. Call it something fun

Call your budget something that you like and that motivates you to keep up with it. Who says it has to be called a budget?

Give it a nickname and a personality. The word budget is boring anyway!

2. Create a budget in advance of each month

Creating a budget in advance of each month means you kick off the next month with a plan, and you aren’t scrambling to figure out what to do. After all, new month new goals, right?

Plan to create your budget a few days before the month starts. You’ll have time to lay things out and figure out what your finances will look like in the upcoming month.

Once you get in the habit of creating a budget, you will even be able to plan out your budget for several months at a time.

3. Don’t assume every month will be the same

Every single month should be planned for separately. No two months will be exactly the same financially, so you want to prepare in advance for things like one-time bills or expenses, travel plans, events, etc. So, creating a new budget specific for each month is essential.

Similarly, budgeting for life-changing events requires extra attention and a budget review. Whether it’s a new baby or you’ve paid off debt, sometimes you need to take a hard look at your monthly budget and accommodate those changes as needed.

4. Create your budget based on your projected income for that month

If you get paid one time a month, twice a month, or every two weeks, base your budget on that projected income so you know exactly how much you have to budget.

Remember that if you get paid every two weeks, there will be a month when you get three paychecks. So plan accordingly.

On the other hand, if you’re budgeting with an irregular income, you may have some challenges getting it right at first. You’ll have to be even more diligent with tracking your spending and estimating your income, but it can be done!

5. Pay your expenses before splurging

Paying expenses first means paying for your essentials, debt, and goals (savings and investments) first before you do any splurging or miscellaneous spending.

The last thing you want is to find that you have overspent on what isn’t necessary and don’t have a way to pay your bills.

However, that being said, it’s okay to splurge and have some fun money. Just make sure you are building your splurges into your budget so you can enjoy them guilt-free.

6. Track your transactions

Tracking your transactions allows you to make sure you stay within your budget and keeps you conscious of your spending habits. You can track your transactions in a spending journal, spreadsheet, or with an automated app or online tool.

If you are just getting the hang of budgeting, it’s a good idea to track your transactions and check in with your budget every day. It will only take a few minutes, and it will help you stay on top of your finances. Plus, you’ll be building up one of the essential money habits of checking in on your finances frequently.

Expert tip: Budgets can change your life for the better

Budgeting may not seem like a lot of fun, but if you find the right method, it can really help your financial wellness. If it seems difficult, try out another method until you create a system that makes sense for you.

And remember that you aren’t budgeting for no reason, you are doing it so you can build a better future for yourself.

Budgeting ensures you can pay bills, pay off debt, and invest money. Remind yourself of how budgeting helps you if you feel like quitting, and don’t give up!

What are the most common budgeting methods?

The cash envelope system, percentage budgets (e.g., the 50/30/20), reverse budgets, and zero-based budgets are some of the most common budgeting methods. They are all different from each other. So the chances are you’ll find one that is right for your lifestyle, and it’s important to find one that works for you.

However, if you don’t want to keep searching for another method, you can create a hybrid of different budgeting methods to come up your own unique budget!

Which budgeting method should I try first?

If you want to know which budgeting method to try first, try out a percentage one like the 50-30-20 rule. It will give you a good starting place with your finances. Then, you can change the percentages as needed depending on your lifestyle and goals.

Keep in mind that there are several other budgeting methods you can try out, too. For example, the reverse budget or the zero-base budgeting method.

What are 5 budgeting methods?

5 budgeting methods that are likely to work for most people are the 50-30-20 budget, reverse budgeting, the 70-20-10 budget, zero-based budgeting, and the envelope system. While there are other types of budgeting methods, these five are likely to be easy to implement for the majority of incomes.

There are plenty of ways to plan your money to make the most of it. As long as you use a method that allows you to pay your expenses and save for the future, you can’t go wrong.

Articles related to budgeting methods

The best types of budget are the ones that work for you! If you enjoyed this article, check out these other great articles on budgeting methods.

• How To Use Use Budget Categories
• How Does The 30-30-30-10 Budget Work?
• Budget Not Working? Here Are 5 Tips For Better Budgeting!
• 10% Rule: Is Saving 10% Enough?
• How To Use The Cash Envelope System To Master Your Budget

Leverage these methods of budgeting today!

The budgeting method you choose can help you succeed financially. If you slip, brush yourself off and get back on track. Take the lessons you learned about budgeting from the previous month and apply them to the next.

If you find that the method you want to use isn’t working, you can adjust it to suit your preference or try an entirely new method. No matter what, keep trying until you find the right way to budget your money and reach your financial goals.

The post How To Budget: The 4 Best Budgeting Methods To Try! appeared first on Clever Girl Finance.

Love it or hate it, if you want to be financially successful, you need to budget your money and success with budgeting means understanding budget categories. Knowing about the different kinds of things you might spend money on can help you figure out which ones apply to you and your financial situation. So, let’s talk about the various categories that you might need, including a budget categories list!

Sometimes, the easiest way to decide on budget categories for yourself is to see a big list and then choose the ones that apply to you. You may not need every category, and that’s okay. It’s all about which items you need to include in your personal budget.

4 Main budget categories and sub-category lists

Below is a list of 4 main expense categories for a budget as well as a list of sub categories for each one. I also elaborate on the importance of each category and how to clearly layout your sub categories:

1. Finances for your future self

Your financial future is affected by what you do now. And so it’s important to have a category in your budget that caters to our future self. This group of categories includes:

• Retirement account contributions e.g. 401k/403b/IRA
• Non-retirement investing (e.g. index fund investing)
• Health savings account (HSA)
• Emergency fund
• Credit card payoff
• Student loan payoff
• Other loan payoff

Why having a plan for your future self is important

Ever heard the words “pay yourself first“? It should be a consistent part of any plan you make. Because of this, the “finances for your future self” category is all about thinking ahead.

But what does pay yourself first mean? Before you pay any bills or do any shopping, a portion of your earnings should be diverted into your retirement account, if possible, for your future self and your emergency savings accounts for a rainy day.

Time goes by so quickly, and planning for the future version of you will ensure that you can enjoy your retirement and not have to depend on the government or your children to take care of you. 40% of elderly Americans are dependent on social security during retirement, according to the National Institute on Retirement Security, so it’s important to save for the future now.

Having an emergency fund, or even a rainy day fund, will also provide you with a buffer in the event of an unexpected cost so that you can rely on your emergency savings instead of a credit card or other debt.

Almost 50% of Americans want to focus on saving for emergencies, according to Nerd Wallet. So it’s incredibly important to add this to your budget in case anything unexpected comes up that you need to pay for.

Also included in this group of categories is the money to pay off any debt you have (e.g., your credit card debt, car loan, personal loans, student loans, etc.) because it is essential that you pay off your debt as soon as you can so you can focus on building wealth. It may not seem this way, but debt payoff is actually future-focused because it will offer you more security and money later.

2. Essentials

Your essentials are items that can’t be taken out of your budget or put off for a later time. They are things you need to pay for in order to have a good quality of life, so they should be one of the first things on your budget categories list. Your essentials category would include:

• Mortgage payments or rent
• Utilities (e.g water, electricity, internet)
• Groceries and food budget
• Transportation costs and/or car payments
• Renters insurance
• Homeowners insurance
• Property taxes
• Health insurance
• Auto insurance
• Life insurance (e.g. Term or Whole life insurance)
• Disability insurance
• Dental care
• Childcare costs
• Pet food
• Necessary personal care items

Getting really clear on what your essentials are

As mentioned, your essential are the things you need to live your life. However, this category does not include money for shopping or getting your nails done — those are not essentials.

Instead, essentials focus on the categories that you need to get by. Meaning your basics such as rent money and any housing cost categories, transportation, insurance, and food.

Your essentials are your non-negotiable costs, and they should be one of the first things you take care of when you get a paycheck.

3. Life goals

Your life goals include things like saving for the future outside of retirement and other things that you may want to pay for to enhance your life.

Although not as essential as a car payment or groceries, “life goals” is a really important expense categories to have in your budget.

• Tuition savings for a child’s college education
• Certifications or training to help with your career aspirations
• Savings to start a business
• Savings to move to a new city or country
• Home down payment
• Home repairs and projects
• Donations to charities you believe in

Defining your life goals

Your life goals might include things like your midterm savings and investments for the next 10 to 15 years, business savings, saving for a home purchase, saving money for college, and so on.

I recommend creating separate accounts to save for each of your different life goals. I personally have automated deposits set up for different goals, and it’s helped me stay on top of my savings!

4. Everything else

Anything that isn’t essential and isn’t saving for a specific goal is considered unnecessary. But this category is usually the most fun, and it makes life more enjoyable!

• Entertainment e.g. concert tickets, movies, etc.
• Gym membership
• Eating out e.g. fast food, coffee shops, and restaurants
• Vacations
• Gifts e.g. for extended family and friends, weddings, anniversaries, or birthdays
• Cable subscriptions or cable alternatives
• Streaming services e.g. Netflix, Hulu, Amazon Prime
• Hobbies e.g. gardening, crafting
• Self care e.g. getting your nails done, going to the spa for a massage, etc.

Everything else should include fun money

The “everything else” category is your splurge money. It’s the money you would spend shopping or saving for a wish list item, traveling, entertaining yourself, and whatever else it is that you would typically do as a part of enjoying the life you have.

Having a category like this matters because you want to be able to enjoy your money sometimes, even as you pay your bills and work towards your goals. So it can boost your morale and allow you to reward yourself for working hard.

You might include things like going to the movies, dinners out, birthday gifts for friends, and other items in this category.

Using percentages for your budget categories

Once you are clear on your list of budget categories and sub-categories. It’s a good ideas to assign each category a percentage. You likely won’t be spending the same amount on each category. Some categories will require more of your income than others.

However, knowing approximately what percent of your income should be assigned to each category is a big part of organized finances and can help you with improving your spending habits.

For each of the 4 main categories mentioned above, below is a general guideline of how your money can be allocated. However, based on your individual expenses and goals, the percentages may look a bit different for you.

• Finances for your future self: At least 20%
• Essentials: 50%
• Life goals: 15%
• Everything else: 15%

Keep in mind that you can adjust these budget category percentages according to your goals and timelines. Remember, your budget is your blueprint for how to manage your money so you can build wealth, and it should work well for you personally. Be sure to check out our example of a budget.

Expert tip: It’s ok if your budget categories change

Choosing budget categories is not a one-time process. Budgets are ever-evolving and might need to change to meet your current needs.

Although you will probably always need to include the four main budgeting categories, you may find that you may need to adjust or change the sub-categories.

So make it a habit to continue to check in with your expenses, goals, and list of budget categories to make sure your spending reflects them.

How do you plan your budget categories if you are focused on paying off debt?

If you are focused on paying off debt, you should plan to pay as much as you can towards your debt each month rather than the minimum payment. And so paying off debt might mean lowering the amounts you contribute to your different budget categories.

For example, you might need to spend less on things like entertainment or vacations and instead reallocate the difference to paying off your debt as fast as possible.

Like with everything money-related, sticking to your plan requires discipline. If you struggle with your plan initially, having an accountability partner is a great idea!

Reach out to a friend for support. We all need a cheerleader sometimes.

How many categories should I have for a budget?

The number of categories you choose for your budget depends on your expenses, goals, and splurges. That said, it’s a good idea to have categories for:

• Long-term savings goals for your future self and debt repayment
• Your essentials and needs
• Other life goals,
• Non-essentials like travel, splurges or fun money

You can then break these main categories into smaller sub-categories. Although there is no perfect number of categories, it’s a good idea to start with these four main categories at the very least.

What are the four main categories in a budget?

The four main category groups in a budget are finances for your future self, essentials, life goals, and everything else. You may choose to call each of them by different names e.g. “retirement and savings,” or “discretionary spending” but the main idea for each category is the same.

You will likely need all four of these categories to create a balanced budget, though your sub-categories under each of the main categories you choose will vary depending on your expenses and even your goals and lifestyle. For instance under your main category, “Finances for your future self” you might have sub-categories for your 401k/IRA, emergency savings, and student loans payoff.

Articles related to budgeting

If you liked this article about budgeting with budget categories, check out these other great articles:

• 20 Cash Envelope Categories For Your Cash Budget
• The 50-30-20 Rule: How It Works + A 50 30 20 Budget Template
• How Does The 30-30-30-10 Budget Work?
• How To Create A Family Budget That Works For Your Family

Leverage these expense categories in your budget today!

Like any art, budgeting takes time to master. Additionally, part of budgeting well is defining your budget categories. Knowing what category something belongs in can help you decide if you save for it or purchase it now or later.

Budgeting can be difficult, but categories can help! If you need hands-on budget counseling, that’s okay, too. The most important thing is to start and just keep going even when it gets tough, knowing that making a plan is going to help your finances.

The post How To Use Budget Categories appeared first on Clever Girl Finance.

What is credit, how does credit work, and why is it important? When it comes to making big purchases like buying a home or financing a business, knowing and understanding your credit is super important! Find out all you need to know about credit here!

Your creditworthiness is used to determine your eligibility for “pay to use” services like your cell phone or your apartment rental. It’s also used to determine your interest rate on your credit cards and loans.

Some employers may even use your credit report as a determining factor when considering you for a job! Given how important your credit is, let’s get into how credit works.

What is credit and what makes up your score?

Your credit is essentially your ability to borrow money in the form of a loan or credit card at a specific interest rate based on your past borrowing and payment history. Your credit score is made up of several factors, including history, payments, debt to credit ratio, age of the debt and more.

That said, in order to full answer the question, “how does credit work?”, it’s important to know more about each of these different factors.

Credit history length

Your length of credit history is how long you’ve had credit for. If you’ve had an account open for many years, it’s usually better for your credit score.

It obviously takes time to build up a good credit history length, so this isn’t something you can immediately change. If you have no credit at all, you can start building the history length by opening an account.

Your credit history is a compilation of all credit cards and loans you’ve ever had. All the way back to that first credit card you signed up for in college in order to get the free t-shirt (been there, done that!).

It’s the history of how (well) you’ve paid your bills in the past, and it records the amount of cards you have, how much you owe, etc.

If you are new to building credit, you might have an insufficient credit history. But this can be remedied over time by mindfully applying for credit and paying your bills on time.

Credit mix

There are a lot of types of credit, including credit cards, mortgages, student loans, etc. So, your credit mix is how much of the different types of credit you have.

The Ascent from Motley Fool explains that having a good credit mix means a balance of both revolving and installment credit.

History of payment

History of payment is a very big factor that helps determine your overall credit score. It is how well you’ve paid back your debts over time, and it accounts for 35% of FICO scores as well as being important for VantageScore, claims Forbes.

So, if you’re wondering where to start with building good credit, paying on time is an extremely important thing.

Credit utilization (Debt to credit ratio)

Credit utilization is another very important thing for determining your credit score. It is also known as your debt-to-credit ratio, and it is essentially how much you owe, divided by the amount of available credit you have. Using more than 30% of your available credit can make your score drop.

So you want to be careful not to take on any debt that you don’t need to and pay off your credit cards and loans as soon as possible.

New credit

Any new credit cards or loans can affect your credit. If a hard inquiry (when your credit is checked for a loan or credit card) is made when you apply, it can affect your score.

However, Bankrate explains that new credit may also have a positive impact if it improves your credit mix or utilization.

So it’s important to be aware of how this can impact your score before you apply for anything new.

Two types of credit

So, how does credit work when it comes to the types of credit that exist? There are two main types, called revolving and installment credit. Here are the details.

1. Revolving credit

Revolving credit allows you to continue to borrow money on a revolving basis, even if you are currently paying the money back. The best example of this is a credit card, which allows you to make payments while simultaneously using the card. But be sure to learn how to use credit cards wisely.

Other examples of revolving credit include home equity lines of credit and personal lines of credit.

2. Installment credit

Installment credit is a fixed amount of money that you borrow and then pay back over time. You’ll make payments on it continuously until the amount is paid back. But you will pay back with interest.

A home mortgage is one of the best examples of an installment loan, and there are also student loans and other types of loans. Other examples of installment credit include car loans and personal loans.

How your credit score is calculated

So, how does credit work when it comes to your credit scores? In the US, there are 3 major credit bureaus: Equifax, Transunion, and Experian.

Their main job is to collect your credit information from various sources, aggregate them into a report, assign you a credit score based on their methodology, and make this information available to your potential lenders.

You’re assigned a credit score, a number typically between 300 to around 850. Your credit score basically reflects how well you’ve managed your credit cards and loans in the past. A good credit score is deemed as 700 and above.

There are two main credit scores used by these bureaus:

FICO score

The FICO score is the most popular scoring method. Factors used to calculate your FICO score include payment history, debt owed, age of credit, new credit/inquiries, and types of credit.

90% of the top lenders use FICO scores. Score range: 300 to 850.

Fico scores are extremely important to consider, but there is another main scoring method.

VantageScore

The VantageScore is another scoring model. It was created by the three major credit bureaus.

Factors used to calculate your VantageScore include payment history, credit utilization, type of account and age, and credit behavior. Score range: 300 to 850.

Expert tip: Credit isn’t everything

Your credit score does matter for a lot of things, for you as a borrower, from getting a mortgage to being approved for a new credit card.

However, it’s essential to remember that your credit score is just part of your financial picture. There are other things that matter just as much, like saving, investing, and retirement planning.

If you are trying to build your score and it isn’t where you’d like it to be, don’t worry. Focus on the things you can control by continuing to choose financial wellness, and your credit will eventually improve with this intentional action.

Key tips to build and maintain your credit

Now that you’ve answered how does credit work, let’s focus on the best way to build credit.

Building your credit

It’s a smart idea to try to improve your credit score as much as possible. It can help you getting the best interest rates on loans, credit cards, and many other types of debt.

Employers may even leverage your credit score as part of their background checks depending on the role you’ve applies for. Here’s what to do to make your credit score better.

Understand your current credit standing

In order to improve your credit score, you need to know your current credit standing. This is essentially the starting point when it comes to the best way to build credit.

So, what is your credit score? When was the last time you checked your credit? Is everything on your credit report documented accurately?

Furthermore, are you paying all your bills on time? Are you aware of any delinquencies?

You should be able to answer all of these questions about your credit at any point in time. Then, you’ll have a good idea about your credit status before you apply for any loans.

Knowing your credit score and what is in your credit history will also make you aware of credit fraud or identity theft of your personal information. Then, you can figure out what to do if your identity is stolen.

It is very important to catch this early because if you catch it too late and your credit has already been damaged, it can be a pain to fix.

In the US, you are entitled to a free copy of your credit report from each of the three bureaus once a year, according to USA.gov. Check out your free credit report at annualcreditreport.com.

It’s a good idea to obtain a copy of your current credit report from all three credit bureaus. After all, you want to know where you currently stand with your credit.

You need to understand what has been reported about you to the credit bureaus. That means information regarding your payments, how much you owe, your different account types, and any late payments or delinquencies.

Pay your bills and loans on time

Paying your bills on time is a big part of how credit works. It proves your creditworthiness to lenders and has a huge impact on your credit score.

If you are behind on any payments or have bills piling up, you should try your best to catch up as soon as you can. Call your creditors to create payment plans and set up new payment dates.

It’s also a good idea to set reminders for yourself for all your bills. Then you can make sure you don’t forget to make any payments in the future.

Build all your recurring payments (along with their due dates!) into your budget. Also, consider automating your payments.

Reduce your overall debt-to-credit ratio

You can do this by paying down debts and/or paying them off each month. Your overall debt load, as well as your percentage of credit utilization, affects your credit score. You can calculate your credit card utilization here.

Let’s say you have a credit card with a limit of $1,000, and you owe $950 on it; your utilization is 95%. High utilization can count against you because creditors use it as a gauge to see how likely you are to pay back what you owe.

You can also try to add to your credit limit and pay down debt at the same time to make your debt-to-credit ratio smaller.

Don’t close old accounts

So, how does credit work when it comes to your old credit accounts? Your credit card accounts make up a vital part of your credit history, so if you have accounts that show you’ve been paying your bills on time consistently, you’ll want to keep them as part of your credit history.

If you have accounts you’ve paid off, keep them open and make the occasional small purchase on them. Pay them off in full each month.

Monitor your credit

Many banks and credit card companies now provide free updated credit scores as well as daily credit monitoring. It’s worth looking into these services to stay on top of your credit score.

Maintaining your credit score

Once you finally get to a point where your credit is good, how do you ensure you stay there? By maintaining your score. Here’s how:

Pay off and avoid debt

Paying off debt shows your creditors that you are financially responsible, and avoiding it as a whole (especially credit cards) will give you fewer bills to pay each month. It will also allow you to focus on what really matters – building wealth.

So learn how to pay off credit cards fast and use your debit card for purchases.

Build an emergency fund

Your emergency fund is essentially your backup plan in the event the unplanned occurs. Having one means you won’t have to rely on debt to resolve your situation, which in turn means you can keep your credit utilization ratio low.

Save for retirement

Just like with having an emergency fund, over the long term, saving for retirement reduces and hopefully eliminates any reliance you have on debt. A solid nest egg for your future self means you won’t need to finance the costs of your lifestyle come retirement.

So consider different tips for retirement and start planning.

Check your credit frequently

Checking your credit frequently will inform you of what’s being reported, this way, you can take any necessary actions to rectify inaccuracies if they occur.

Apply a credit freeze

It’s also a good idea to establish a credit freeze that prevents the opening of new lines of credit in your name. It can help protect you from credit fraud. If you are not applying for a new line of credit or loan anytime soon, it’s definitely something to consider.

Find out more about the process if you’re wondering, should I freeze my credit?

These are all things you should be doing over the long term. Establishing good financial habits ensures you avoid scenarios that will impact your credit.

3 Common credit myths

Now that we’ve gone over the question of what is credit, plus some ways to build your credit and stay in good standing, let’s dispel some of the myths people commonly believe about their credit.

Having a thorough understanding of these incorrect assumptions will help you make sound financial choices.

There are a number of myths going around about how credit works, including:

Myth: Holding a credit card balance is good for your credit

Wrong! Carrying a balance isn’t a great idea. Not only will you owe money, but you will also be paying interest.

That means the price of whatever you paid for on credit will cost you more money every month that you carry a balance.

You should strive to pay your credit card bill in full and on time every month to build and protect your credit score.

Myth: Checking your credit report will reduce your credit score

If you are applying for loans or lines of credit, there will likely be hard inquiries made on your credit report.

A hard inquiry for credit card applications or credit checks can cause a temporary dip in your score, but soft inquiries such as checking your credit score through credit monitoring tools will not impact your score.

Myth: Once a credit score is bad, it can’t be rebuilt

Your credit can be rebuilt over time if you focus on developing good credit habits and working through the issues on your credit report.

Things like paying your bills on time and in full, coming to agreements with collection agencies for any accounts that are delinquent, getting consumer credit counseling or coaching, etc., are all steps you can take towards rebuilding your credit.

What is a simple definition of credit?

A simple definition of credit is being able to borrow to pay for things and then pay it back at a later time. So your credit cards and any loans you obtain are all considered credit.

You can use credit for many good things e.g. to purchase an asset like a home that has the potential to appreciate. But that said, because you are borrowing money, it is a potential debt that has to be paid back, so you should use it with caution and with a plan.

What is a good credit score?

The general consensus is that a good credit score is 700 or higher. With a credit score like this, you’ll likely get approval for a loan at a good interest rate. An excellent credit score, on the other hand, is about 800 and higher.

How does credit build up?

Credit builds up over time and with good credit behavior. Paying off your debts on time, keeping accounts open, your credit mix, and other factors can help build up your credit.

It takes time and patience to build your score, so don’t expect overnight results.

However, you can consistently take steps to improve your score and make good money moves.

Is credit the money you owe?

Credit isn’t the money you owe, it’s the amount you can borrow and will need to pay back. Credit, however, has the potential to become money you owe, but only if you use it.

For instance, if you have a credit card that you can spend $5,000 on, then you have $5,000 worth of credit. But if you use some of it, then there is less that you can borrow.

What builds your credit score the most?

Your payment history over time builds your credit score the most. That said, there are many factors that contribute to credit.

FICO suggests keeping credit accounts open, using a low percentage of the credit available to you, and not trying to get too much new credit to start.

Articles related to the best way to build credit

If you enjoyed learning about how credit scores and credit works, then you’ll like these other blog posts!

• 27 Tips For How To Pay Off Credit Cards Fast
• The Advantages And Disadvantages Of Credit Cards
• Why Did My Credit Score Drop?
• How Do Credit Card Companies Make Money?
• Can You Pay A Credit Card With A Credit Card?

Learning how credit works can benefit you financially!

So, now that you know how does credit work, remember you should use credit wisely and to your advantage. That means using it to obtain a home loan, get a cell phone, sign a lease for an apartment, or for business financing (with a solid business plan).

Don’t use it to rack up credit card debt, which, over the long term, is to your disadvantage. Learn more about building good credit with our free course!

The post How Does Credit Work? Here’s What You Need To Know appeared first on Clever Girl Finance.

Let me guess: You’ve searched Google trying to find the best work from home jobs and the results were overwhelming. Working from home is now both a necessary and popular option for many, but there don’t seem to be enough opportunities.

Every now and then, you read legitimate stories of how people radically changed their lives with the best work from home jobs. You know it’s possible, but how? Well in this article, you’ll learn just how to find your own perfect job so you too can start making money online today!

When you check out the remote job market, some look like scams, and others ask for payment. And the rest ask for skills you simply don’t have. Meanwhile, you’re seeing a ton of people post about how they made $20,000 this month while sitting in their PJs at home. So how do you navigate through the confusion of finding a legit work from home job?

Well, whether you prefer to work alone, are a stay-at-home mom, or a teenager looking for ways to make money, we’ve got you covered! PS We also have a dedicated list of jobs that pay well without a degree.

Benefits of work from home jobs

The gig economy is booming. In fact, more than one-third of the US workforce participates in the gig economy (that is 36% to be precise). In real numbers, that works out to 57 million people!

It is clear that this movement is here to stay, and culturally, work arrangement thinking is changing fast. The advancement of technology is a major factor in teleworking.

Plus, people are more mobile and therefore able to participate in the workforce independent of their location. Shared economies such as Uber and Etsy are dominating their markets presenting more and more opportunities for everyone to get a share.

These stay at home jobs have many unique benefits including:

1. You can set up a home office the way you want with a work from home job

Not into working from a cubicle with an uncomfortable rolling chair? Have you always wanted a standing desk but your employer never supported such arrangements?

Working remotely from home lets you customize your workspace the way you really want. No questions asked. No one to explain yourself to.

It makes a world of a difference if your work environment influences your creativity and productivity.

2. Work from home jobs give you the freedom to wave goodbye to office politics

An often unpleasant part of a regular day job is navigating the waters of office politics. In some roles, this isn’t an issue, but in others, politics can really ruin what is an otherwise pleasant field of work.

Stay at home jobs free you from the politics in the office, rigid hierarchical structures, and the stress that can come with such a role.

3. Work from home jobs mean your office can be anywhere you want

Related to the above, your office can really be anywhere. As unrealistic as it may seem to see people working from the beach, the best work from home jobs make this possible.

You’ll have the flexibility to work from any location – coffee shops, home, library, outdoors, car. Pretty much wherever you like!

4. You save more money with a work from home job

Work from home arrangements come with cost savings benefits in categories such as transport and even food. With no need to commute anywhere daily and the ability to eat at home, you’ll save money.

You can also look for top paying jobs from home to add to your income. As a result, you are in an advantageous position to accelerate achieving your financial goals.

5. You learn new skills with a stay at home job

While it may be less convenient to no longer have colleagues whose brains you can pick on the fly, as you work from home, you’ll gain really valuable skills.

You may find yourself making simple changes to the backend of a website or running social media campaigns that you previously knew nothing about! Whatever the case, embrace the process and learn as much as you can because you will likely use it again in other endeavors.

6. You experience a more flexible schedule with a work from home job

With less focus on face-time and 100% focus on producing results, working from home can give you the flexibility you need to control your own schedule as long as you finish what you set out to do.

If you’re a night owl, freelance jobs from home help you work in your productive windows with no disturbances and without a need to start your workday at 9 am. You can also take breaks as you need to and run errands during the day that you otherwise would not have been able to.

30 Popular online jobs anyone can do

The following suggestions are great work from home job ideas. There are different requirements based on the job, but many of them are easy to get into.

1. Virtual Assistant

As the gig economy grows, more and more people are scaling their businesses, and many need an additional hand to help them manage routine tasks while they focus on growing their companies.

If you’re a ninja at organization, a great communicator, and are self-motivated, then a virtual assistant position may be just what you need. Typical tasks include schedule planning, email management, answering phone calls, data entry, booking travel, and managing social media.

Experience required: Organization and basic computer skills to get started.

Recommended places to start: Check out this course that will help you set up your Virtual Assistant business in the next 30 days, and sites like Upwork, FlexJobs, and Remote.co.

Average salary: $17.84 an hour.

2. Online ESL tutor

The internet opened up a ton of opportunities including the ability of two people on different continents to communicate live. Fluent English speakers can teach others looking to brush up their English skills.

As an ESL teacher, you will be able to teach English to clients in places such as Hong Kong, China, and the Middle East who are looking to improve their career prospects by learning English. Lessons can be conducted via Skype or through software belonging to agencies that hire tutors for their clients.

Experience required: Bachelor’s degree and fluency in English.

Recommended places to start: Legitimate online sites such as VIPKid and Teach Away.

Average salary: $10-20 on average per hour.

3. Proofreader

If you love catching grammatical errors in writing, proofreading may be the online work you need. Proofreading skills are useful in many arenas – from transcripts for court reporters to the world of book writing.

Proofreaders take the time to read through articles and writing before it is finalized. They check for errors and anything that looks off about the writing. Some bloggers also hire proofreaders to edit the content on their sites to ensure that it reads well and is error-free.

While proofreading may not make you a ton of money, it can certainly boost your income and even allow you to travel the world or make big purchases.

Experience required: None.

Recommended places to start: Check out resources like Proofread Anywhere.

Average salary: $22.38 per hour.

4. Blogger

Over the past decade, blogging has grown extremely popular as one of the best work from home jobs for people who enjoy writing. It gives you the opportunity to share information with an audience that is interested in your topic.

Starting a blog today has never been easier. You can have a site up and running within minutes. Your own computer and internet connection can make blogging one of your freelance jobs from home.

If you’re a new blogger, you may find yourself caught up in trying to figure out the perfect name, color scheme, WordPress template, etc. Instead of getting stuck on the technicalities or the look of your blog, focus on building great and helpful content.

Experience required: None.

Recommended places to start: We absolutely love the resources on YouTube.

Average salary: Unlimited, anywhere from $0 – > $10,000 / month and beyond.

5. Freelance writer

Many blogs and websites hire writers to put together content for them. This includes blog posts, specific web pages, or any other long-form content related to their business.

Freelance writing is a great service to provide and demand is expected to grow as more and more businesses go online. Plus, you’ll have the chance to make your own hours.

Experience required: None.

Recommended places to start: Explore local businesses in your area that may be in need of writers, join Facebook groups, and market your services on LinkedIn.

Average salary: $50+ per article.

6. Social media manager

Social media accounts went from a guilty pleasure to a mandatory part of every business over the past few years. The quickest way to engage with your audience is through social media channels such as Pinterest, Facebook, and Instagram.

Curating a perfect Instagram feed or finding group boards to join can be very time-consuming for business owners, so many will hire a dedicated social media manager to do digital marketing.

To start, it will be helpful for you to know and understand what an audience in your client’s niche is drawn to. Are they looking to be inspired, motivated, or educated? Job responsibilities include curating the content, tracking engagement, and making tweaks to the social media strategy.

Experience required: None.

Recommended places to start: Familiarity with how different platforms work, responsive attitude.

Average salary: $56,611 a year.

7. Data entry clerk

Data entry jobs tend to be all over the internet but as you browse through them, you need to be really careful to avoid scams. These jobs will by no means make you rich so they should ideally be considered as supplemental income.

Data entry jobs are one of the best entry level work from home jobs where you are behind a computer or laptop, and you input data – numbers or any other information such as phone logs into a database. Be sure to cultivate skills such as organization, attention to detail, and teamwork.

Experience required: None.

Recommended places to start: Check out Clickworker.

Average salary: $10 to about $17 per hour, with the average being $15.43 per hour according to Payscale.

8. Resume writer

Many job-seekers don’t have the time or the adequate skills to put together a well-crafted, interview-winning resume. This is where a professional resume writer comes in who can put this together in good time.

If you’re wondering how to get started, putting together resumes for friends and family is a great way to begin, in addition to selling your services on online marketplaces. You can do this type of remote work part-time or full-time once you get enough clients.

Experience required: Understanding of hiring practices in a corporate environment and good writing skills.

Recommended places to start: Edit resumes for people you know, and find clients on sites like Upwork.

Average salary: $33,457 – $43,785 annually.

9. Graphic designer

If you’re creative, you’ll love working on graphic design projects. Armed with some creativity, motivation, and minimal design skills, you can have a thriving graphic design side business.

The key thing to remember with graphic design is that while technical skills can be developed over time, developing a “good eye” for colors, elements, and themes will be what sets you apart.

In addition, while there are many creatives out there, only a handful are well versed and comfortable with marketing their services, so to set yourself apart, polish up on your design skills, and equally importantly, learn how to sell yourself.

Experience required: No design school necessary, but pros depend on tools such as Adobe Illustrator and Photoshop.

Recommended places to start: The Graphic Design School Book or a Graphic Design Bootcamp or sell your work on sites like Etsy, RedbubbleCreative Market or Zazzle.

Average salary: Approximately $50,206 a year.

10. Website designer

It’s no secret that almost every business needs to have a web presence to be competitive today – it’s the primary “home” for many businesses and this creates a lot of opportunities for web designers. So website designing is a great freelance jobs from home option.

Businesses needing web design services come in all shapes and forms – from doctors’ offices and law firms to e-commerce stores and bloggers.

The one thing they all look for is an on-target web experience that speaks well to their target audience and results in the conversions, subscribers, or sales they are looking to achieve.

Experience required: Knowledge of programs such as HTML and CSS.

Recommended places to start: With a book on designing and building websites.

Average salary: $67,800 as a freelancer.

11. Customer service contractor

Recently, some companies have been shifting much of their workforce into remote positions, and often, customer service jobs fit the bill for this type of change. Customer experience is very important, and businesses want to know that their clients are receiving great help.

For this role, you’ll likely answer telephones, book appointments, help clients, and do administrative tasks. It can be one of the best work from home jobs to do with kids at home.

If you’re really ambitious, you can establish your own Customer Service company that hires other customer service representatives. Hire your employees out to organizations looking to ramp up their customer service teams.

Experience required: None.

Recommended places to start: Job sites such as Flexjobs or Craigslist.

Average salary: $10 to about $17 per hour, with the average being $15.43 per hour according to Payscale.

12. Online store owner – Etsy/eBay/Amazon

If you’re skilled in making things with your hands, you can sell your items online. Or make and sell things from home such as digital products and printables that your customers can download using your store. It’s one of the best work from home jobs if you are entrepreneurial.

If you’re not an artisan, online stores are still a great option for you. Marketplaces such as Amazon and eBay can be great places to sell items ranging from electronics to books, and pretty much any product customers may need.

The beauty of these marketplaces is that you don’t have to have an existing audience to start making money. The key instead is to focus on building great products, taking really good photos, and ensuring that you have the right keywords and good descriptions in your listing. You just need a laptop and a good attitude.

Experience required: None.

Recommended places to start: Join Facebook groups related to the specific platform, check out Etsy, and gather information from blogs and books.

Average salary: Unlimited, making this one of the top paying jobs from home. It will however likely require some start-up costs.

13. Appointment setter

Do you enjoy talking on the phone? Are you great at getting answers to questions and quick thinking? You could be well suited for the job of appointment setter.

To be an appointment setter, you’ll need to set up appointments between the company you work for and clients, and this may include cold calling. You want to help the company make sales so it’s best if you are good with details and like to get results.

Experience required: Communication skills and sales are both helpful.

Recommended places to start: Try LinkedIn or sites like Indeed or ZipRecruiter.

Average salary: Talent.com reports approximately $18.75 an hour.

14. Online juror

And you thought jury duty was just an inconvenience! Turns out, this is one of the legitimate stay at home jobs! If you want to do something that is unique yet interesting, this could be your gig.

Online jurors get paid to be part of mock trials. You will be presented with evidence and then asked for your decision to help lawyers and attorneys prepare their cases. So if you’re interested in law and enjoy reviewing information, try this out.

Experience required: 18+ years, US citizen, no criminal record, literate, and able to make judgments clearly, according to Indeed.

Recommended places to start: Try out ejury.com or Resolution Research to start.

Average salary: Generally up to $60 per case, though rates can vary a lot.

15. Event and wedding planner

If you’re great at organizing, schedules, phone calls, and giving instructions, then event and wedding planning might be for you. It can be fun to help people create a special day or event, and you can get paid for it!

You can do this online by setting up appointmentns and communicating with people via email and phone. While most events will require you to be there for the day of the party, there may be exceptions and you can simply handle all the planning up until the party.

Advertise yourself as a virtual event planner and offer services online, including Zoom meetings, schedule creation, vendor contacts, etc.

Experience required: None, but some organization and planning skills are important.

Recommended places to start: Your own website, and gather information from sites like Eventbrite.

Average salary: Approximately $50,400 annually.

16. Investor

Unless you have quite a bit of start-up capital, investing is one of the best entry level work from home jobs that will take quite a bit of time to become a full-time income. So begin investing slowly after research. You may choose mutual funds, ETFs, REITs, or other investing options.

Your investments will grow over time until you make an income from dividends or interest. When this replaces your income, you can cease working a regular job and begin living off investments as one of the top paying jobs from home.

Experience required: None, but some knowledge about investing is important.

Recommended places to start: Fidelity Investments or Vanguard are good options to begin with.

Average salary: Varies depending on dividends, interest rates, and the amount you invest.

17. Coach

Becoming a coach will allow you to work flexible hours and work in a field you enjoy with clients you choose. There are many types of coaches, from career coaches to financial and more, and it’s one of the best work from home jobs for anyone that enjoys teaching and motivating others!

If you’re qualified and know a lot about a subject, you may be able to take on some clients as a coach and help them to excel in whatever you specialize in. Be sure to get any necessary certifications and training first.

Experience required: Depending on the type of coaching services you offer, you may need a degree or certification.

Recommended places to start: Your website, social media, and networking can help.

Average salary: Extremely varied depending on the work you do and the rates you set.

18. Accountant

This requires some job training and a love of numbers. But if you don’t mind the work, it’s one of the best work from home jobs for people who love math. Being an accountant is a great work from home job, and it’s pretty lucrative.

Experience required: CPA license, and a bachelor’s degree in a related field may help.

Recommended places to start: Check Indeed or LinkedIn for job opportunities, or advertise to get your own clients.

Average salary: Around $62,291 on average.

19. Transcriptionist

A transcriptionist job is well suited for people who are very good typers and can work in a quiet environment. Transcriptionists listen to recordings and then type out what they hear. The work isn’t too challenging but it may be very time-consuming.

This might be a great idea as a part-time job. It’s a good way to make easy money while working from home.

Experience required: Typing skills are helpful and you may need some computer equipment.

Recommended places to start: Try out sites like Rev that specialize in transcription.

Average salary: According to the Transcription Certification Institute the usual pay is about $19.58 an hour, though you can make more with experience.

20. Translator

If you’re bilingual you can find work as a translator. If you enjoy reading and are fluent in multiple languages, this can be a fun and lucrative job. You will spend your time translating documents from one language to another in most cases.

​Experience required: Fluency in multiple languages, sometimes a bachelor’s degree.

Recommended places to start: Try out Gengo or sites like Blend Express to begin.

Average salary: $61,786 a year according to Salary.com.

21. Travel agent

Do you find flight and hotel deals all the time? Are you great at planning out trips and booking accommodations? You would make an amazing travel agent, which can be one of the most exciting and rewarding freelance jobs from home. 

This type of job can be done for a company, or you can work on your own if you prefer that. If you enjoy helping people and planning amazing vacations, this job is for you.

Experience required: A high school diploma and computer and communication skills help.

Recommended places to start: Check out ADTRAV to work with a company or start your own business.

Average salary: A little over $18 an hour.

22. Cyber security professional

If you have a technology background and the right experience, you can work in cyber security from anywhere. You’ll help protect businesses from cyber-attacks. This job is definitely in demand and not going anywhere anytime soon, so it’s a great career choice.

Experience required: A degree is helpful but not always necessary; you do need training, though.

Recommended places to start: Check out ZipRecruiter, FlexJobs, Indeed, and other job sites.

Average salary: You can earn $120,000 a year or $57.69 per hour usually, making this one of the top paying jobs from home.

23. Therapists

There are lots of different therapist roles that you can explore as a work from home career option, if helping people is something that you have a passion for. Occupational therapists, cognitive behavioral therapists and divorce therapists are all popular services that people require.

Specializing in certain areas such as mental health will allow you to build up a reputation and charge more for your time. You could even consider setting up online group therapy sessions in your area to support the local community. 

Experience required: You’ll need prior experience as either a social worker, psychologist or psychiatrist before you can work as a therapist from home and a relevant degree and master’s degree.  

Recommended places to start: There’s a requirement to complete a certain number of clinical hours in your chosen field before you’re allowed to work with patients directly. The number of hours varies depending on your state, so check out the requirements before applying for jobs. 

Average salary: Remote therapists earn a respectable $82,268 per year. 

24. Software engineer

Working remotely as a software engineer is an appealing career choice for lots of people. A good computer and reliable internet connection will allow you to work from home, write code and collaborate with colleagues and clients online. 

Choose your own hours, achieve a better work-life balance and get paid to do something you’re good at. What’s not to like? 

Experience required: You can be a self-taught programmer and still get your first developer job without a degree. You might need to pass a code test though.

Recommended places to start: Freelancing is a great way to get software engineer roles. Platforms such as Upwork and Guru are good places to start. 

Average salary: How does earning $130,143 a year sound? Even entry level remote software engineer positions start at $110,000 annually. 

25. Bookkeeping

If you’re happy working with numbers, bookkeeping is one of the best work from home jobs out there. What’s more, it’s a position that is continually in demand because all businesses need to have control of their finances. 

In this role, you will record financial transactions, process payments, conduct banking activities, produce financial reports and more. 

Experience required: The good news is that you don’t need any specific experience to work as a remote bookkeeper, but formal certification from the National Association of Certified Public Bookkeepers (NACPB) or The American Institute of Professional Bookkeepers (AIPB) may help you land a job. 

Recommended places to start: Remote job boards and LinkedIn have hundreds of bookkeeper jobs. All you need to do, is find the right one for you. 

Average salary: You can expect to earn between $35,948 and $43,149 per year as a remote bookkeeping in the US.

26. Recruiter

If you like providing a solution and are good with people, one of the most rewarding stay at home jobs on the market is a recruitment advisor. 

You’ll work closely with employers to understand their ideal candidate before searching for potential matches, screening and shortlisting them before the interview stage. Building relationships with a pool of high-quality candidates is the key to success in this role. 

Experience required: There is no specific experience that you need to be hired as a recruiter. Having the right skills and attitude is what you need to do well. Some specific skills include good communication and listening skills, marketing and sales skills as well as relationship building skills.

Recommended places to start: Growing your network of contacts is one of the best things you can do before applying for recruitment jobs. Remember to sell yourself on your resume and LinkedIn profiles to impress potential employees.

Average salary: Average earnings is about $55,268 per year. Recruiters have great earning potential. It’s the type of job that you will be rewarded for based on your efforts.

27. Project manager

Project management is an excellent job choice if you need work that provides flexibility to suit other lifestyle commitments. It’s a challenging and rewarding career that has tons of possibilities for advancement if you’d like more responsibility (and money).

Teamwork, communication and leadership are essential skills for a project manager. If you feel that you tick these boxes, there’s nothing stopping you from securing one of the best work from home jobs out there as a project manager.  

Experience required: It can be difficult to land your first job in project management, but some experience in a related role and Project Management Professional certification (PMP) will help you get started in the field. 

Recommended places to start: LinkedIn is a reputable job board that lists thousands of project manager jobs. 

Average salary: Project managers tend to be well-paid, with an earning potential of $87,694. 

28. Voiceover artist

Commercials, TV, audiobooks, radio and film need voices to read scripts and play different characters. As a voiceover artist, no two days are the same in this job as you will often be working on several projects at once. And thanks to modern technology, this is easily a job that you can do from the comfort of your own home. 

Experience required: You don’t need any experience to secure your first gig as a voiceover artist, but an audible, clear voice and the ability to influence an audience is a must. 

Recommended places to start: The best way to get into this industry is by connecting with production companies and keeping a close eye on their vacancies. Freelance websites like Upwork also have several voiceover opportunities.

Average salary: Highly experienced voice actors can earn an impressive $199,000 per year, easily making it one of the top-paying jobs from home. Even entry level positions pay a respectable $31,999 annually. 

29. Contract drafter (Clarifying contracts)

Business deals happen on a daily basis, and somebody needs to draft the contracts for both parties. 

As a contract drafter, you will define deal terms, eliminate ambiguity, address issues and produce a legally binding document. You’ll have many roles in this job, making it challenging yet extremely rewarding. 

Experience required: Strong writing experience is a must for this role as it’s your responsibility to ensure a contract is compliant, clear and concise. There are also contract drafting courses that you can go on to improve your skills in this area. Legal knowledge is helpful but not required as all contracts should be reviewed by a lawyer. Keep in mind that many business lawyers offer contract drafting as part of their services.

Recommended places to start: Job boards such as Upwork and Glassdoor list contract drafting opportunities for freelancers to apply for. You may find that these jobs look for proven experience though, so if you’re just starting out you could also approach companies directly and offer your services. 

Average salary: Average earnings are $45,330 but you can make up to $61,000 with experience. A contract drafter is one of the top-paying jobs from home because of the legal insight you need to draft contracts.

30. Book editor

An editor’s main job is to make a book the best that it can be. From fact-checking to removing spelling and grammar errors, you’ll need a keen eye for detail to succeed in this role. 

It’s a fast-paced and exciting career path that you can do remotely. One day you might be reading a pitch for a book, the next you could be speaking to the author and agent! 

Experience required: Many people have a degree in a related field such as journalism or creative writing, but it’s not essential. The experience required will depend on the type of books you want to edit and your employer or client. That said, knowledge of the publishing industry is a great start! 

Recommended places to start: If you don’t already have a solid grasp of the written word, brushing up on your skills is a good place to start. Then find junior editorial and publishing roles to get some experience before working your way up and applying for more senior positions. 

Average salary: Book editors earn approximately $50,335 a year, but you can make more money depending on the types of books you work on and your experience. 

Expert tip: Reach out to work from home friendly companies

When it comes to finding the perfect remote role for you, you don’t have to rely solely on online job boards. Instead, be proactive and research which businesses offer work from home positions, even if they are not actively looking. 

You can do this by using job search engines to create a list of companies that offer work from home opportunities. Once you have your list, contact the company directly about a vacancy you’re interested in and ask if they would consider making the role remote.

It’s perfectly fine to get in touch with a company that you’d love to work for that doesn’t have any active vacancies and express your desire to work for them remotely. 

Where to look for the best work from home jobs

Knowing where to start looking for the best work from home jobs is sometimes the hardest part, especially when there are job scams around. 

Here’s a round-up of the most popular, genuine sites.

FlexJobs

Remote job boards mitigate the risk of work from home jobs because they screen employers for you. 

FlexJobs is a very well-curated site for freelance jobs as well as remote and other flexible jobs. Roles are sorted by the type of job you may want, and you won’t have to worry about scam postings because they research the jobs and monitor new gigs pretty thoroughly.

Just Remote

When searching for remote jobs, it’s important that you understand the country and time requirements before applying. Just Remote clearly highlights these in each post, allowing you to sift through the results quickly. 

We Work Remotely (WWR)

WWR list a vast range of work from home positions, across all industries. Its clean, simple website will help you secure remote employment in no time. 

LinkedIn

Did you know that LinkedIn has over 15 million job roles listed on their site? It’s a great place for job seekers to look for remote work! Use the advanced search functionality to narrow down the results to work from home opportunities only. 

Google search

Search engines will often pull up job listings from less common websites, showing you remote roles that you might not have come across otherwise. 

Contact businesses directly

If a company employ remote workers, the chances are that they will have something come up in the future. If it’s a business you want to work for, there’s no harm in getting in touch with them and showing your interest in future positions. 

How to avoid online job scams with freelance jobs from home

Scams around work from home and freelance jobs from home are a dime a dozen online. It’s understandable that many people are wary of them.

If you’ve been out of work for a while, you may be more vulnerable to scams but the key to avoiding any pitfalls is to trust your instinct on any opportunities that present themselves.

How to spot a scam

Key indicators of scams include requests for payments, pushy and overly insistent recruiters, and an unrealistically high salary for the amount of work you will put in.

Others like weird-looking contact information such as jane@amazonishiring.com, or an immediate offer for work without any formal interview or recruitment process are also red flags.

Additionally, it is very important to do thorough research on any company offering promising work from home jobs. Especially if they are not a widely known company.

Are stay at home jobs legit for making money?

In a nutshell, yes stay at home jobs can be a legit way of making money. Working from home through an online job is possible and legit. However, that doesn’t mean it’s easy.

Behind all the success stories of people making a really good income from their online endeavors are countless hours spent learning a new craft or running an online store.

In many cases, it presents a much higher earning potential than a regular 9 to 5 job. The key is to put in the work.

What job makes the most money working from home?

Without a doubt, tech jobs are some of the highest-paid jobs that make make the most money working from home that you will come across. 

Product Managers in particular can earn over $100,000 from the comfort of their own home. To earn this high salary, product managers are responsible for training, organizing and directing a team to create a product or software. 

Fancy a job as a product manager to earn some decent money? You will need a bachelor’s and master’s degree in a field such as economics or computer science and excellent research, data analytics, roadmapping and prioritization skills. 

How much does Amazon pay for work from home?

When it comes to work from home pay, Amazon’s pay will depend on the position and required skills and experience. On average, you can expect to earn $16 an hour. 

Amazon employs a variety of roles that offer remote working, from customer services to human resources, recruiting and marketing.

So, what’s it like to work for a global business like Amazon remotely? The company is known for its competitive pay and benefits packages. Other benefits such as medical care and vision insurance may be included depending on the role. 

You can sign up for job alerts Amazon’s website so you don’t miss out on opportunities.  

How can I make $80,000 a year working from home?

Thanks to flexible working opportunities, it’s totally possible to make $80,000 or even more working from home. 

Remote jobs that pay $80,000+ include: 

• Mental health therapist
• Programmers
• Software engineer
• Senior project manager
• Cyber security specialist 

Alternatively, you could have a few work from home jobs that will easily make $80,000 combined. For example, you could freelance as a transcriptionist and a copywriter. There are no earning limitations for either of these roles, so the more work you take on the more you earn. 

Can I work from home with no experience?

You can absolutely work from home with no experience! Lots of people do. Making decent money from home doesn’t mean you have to have years of experience behind you. 

And because there are so many opportunities out there that don’t require a previous work history, you can choose something that you’ll enjoy doing.  

Some of the best entry level work from home jobs with no experience are: 

• Administrative jobs 
• Customer service jobs 
• Writing jobs 
• Tutoring jobs
• Translation jobs 

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If you found the ideas in this article on the best work from home jobs useful, check out this related content:

• Tips For Working From Home And Sticking To Your Budget
• The Best High Paying Remote Jobs And Best Remote Job Sites
• Here’s What To Do With Your Old 401k
• Is Working Two Jobs Worth It? What To Consider!
• 19 Of The Best Night Shift Jobs To Earn Extra Cash

Leverage these stay at home job ideas to achieve your goals!

Earning some extra cash with stay at home jobs or freelance jobs from home can be a nice boost to your income. However, it’s important to make sure you leverage the extra income you are earning to reach your financial goals.

So start investing in yourself through books, personal finance courses, podcasts, etc. They are a great way to start acquiring the knowledge you need to use your earnings to build long-term wealth for you and your family.​

The post The 30 Best Work From Home Jobs To Earn More Money! appeared first on Clever Girl Finance.

Whether you’re working for yourself or have an irregular job schedule, budgeting on an irregular income can be tough. You still have to pay your bills, but you aren’t always sure how much money you’ll have. But creating a budget for this type of income is easy to learn!

Perhaps you would like someone to describe irregular income and give examples. According to American Progress, there are millions of Americans who are self-employed. If this is you, or you work as a freelancer or a contractor, your income is dependent on how much work you do, which makes your income irregular.

And sometimes the work you’re doing now won’t pay for another 30 to 45 days!

If you work in the service industry or another hourly job with a rotating schedule, your hours and income can vary from week to week.

Similarly, if you have a sales job where you earn a commission, it can be hard to determine what your actual income will look like at the end of each month. Entrepreneurs and people who work in the gig economy may also face irregular income challenges.

So how do you budget when you don’t have steady paychecks? It may seem that budgeting with a fluctuating income is impossible. But there is a way to best approach your finances that will allow you to be successful with managing your money and give you peace of mind.

Budgeting when you have an irregular income

A budget is a plan for your money. When you have a predictable monthly income, creating a budget with budget categories that work for you is a little more straightforward (though it still has its challenges).

When your income varies, making a plan for your money can be more work, but it can be done. Here are five tips to help you create a successful budget on an income that changes.

1. Create your baseline budget

You can also call this your bare bones budget. The total amount of these expenses is the minimum amount of money you’d need to earn each month.

The expenses include necessities like your rent/mortgage payment, utilities, food, and car payment. It does not include going out to eat, shopping, or entertainment — remember, it’s the bare minimum amount of money that you need to get by.

For some of these, you’ll know exactly how much you’ll be spending every month (e.g., rent/mortgage). For others, you may have to do some digging to figure out how much you should expect to spend.

By doing this, you’ll be able to determine how much you need to have coming in at the very minimum. Additionally, if you earn more than your baseline expenses you can put the extra money aside for any lower income months you might experience.

Budgeting tools and strategies

You can use a number of the best budget templates and tools to categorize past expenses and determine how much you’re spending every month.

Additionally, you can use expense tracker apps to figure out how much you’ve been spending. Then you can use those numbers in your baseline budget for the current month. But you can also use a simple spreadsheet or a spending journal that helps you keep track of your money.

Once you know how much you’re spending, put all the information into a monthly budgeting strategy that lists all your necessities and their costs. Add up the total, and you have the amount you need to get by each month.

You may choose a budgeting app or simply write your budget down. Just make sure you know your numbers and you choose a method that works well for you.

Pro tip: A calendar can also be very helpful to remind you when specific bills need to be paid.

2. Prioritize your essential and non-essential expenses

Your expenses need to be listed in order of importance so you know what to pay first. For instance:

Essential spending

All of your essential expenses should come first with an irregular income, but you can prioritize them. Prioritizing means determining what bills need to be paid first, second, third, etc.

For instance, housing, food, and transportation could be items 1, 2, and 3 on your list. Having this priority in place ensures that you are properly allocating your money to your top budget items first when you get your paycheck. 

It’s also important to note that your emergency fund and any other savings are essentials that should also be taken care of before discretionary spending.

Discretionary spending

Once you create your baseline budget with your necessary expenses, you can add to the list your non-essential expenses or discretionary spending. Things like eating at restaurants, going to the movies, and gym memberships are considered non-essential spending habits.

Prioritize your discretionary spending in order of importance for times when you have extra cash.

Doing this may involve making some difficult decisions and cutting things that you can’t currently afford to avoid overspending.

For instance, going out to eat or that Netflix subscription. While you’re figuring out your budget, it’s important to remain focused on your goals and learn how to stop spending money on non-necessities.

3. Save for future months during the months you earn more

Having an irregular income means you’ll have good and not-so-good months. You can hope that your income will increase over time, but that’s not always the case. Lots of things, like seasons, can factor into how much you’ll be making.

Have a specific account to draw money from when needed

If you happen to earn excess money in a certain month, pay for your most important expenses first (as discussed above). This includes all your necessary expenses and saving goals.

Then, whenever you have a month that you make more money, add some extra funds to a separate account.

These savings will help you in future months in the event that your income declines again. Or if you have unplanned life circumstances that require you to spend a lot of money at once. Saving can help you cover your expenses during those months without having to leverage credit cards, leading to debt stress.

Sinking funds

It’s also a good idea to establish sinking funds. A fund like this is specifically for large upcoming expenses that you know you’ll need to pay for.

You should contribute to this as often as possible. That way, you will have the money you need when the time comes to pay annual expenses or one-time costs.

To find out how much to save, consider all of your upcoming expenses. Both those that are recurring and those that will only happen once.

You can add up the cost of all of them and then divide that amount by several months or divide it up through the whole year.

4. Earn extra income

If you find that your earned income doesn’t pay for as much as you would like it to, there is another option: earn more!

Ideally, your irregular income provides for your living expenses. But if you want more discretionary or saving money, try some of these ideas:

Side hustle

You might try starting your own business or easy side hustles in order to earn more. It can be something that you do in addition to your full-time job that doesn’t take up too much time. The great thing about this is you can potentially earn as much as you want!

A side hustle could be walking dogs, cleaning houses, taking on freelance writing jobs, etc. Anything that you have the talent or time to do.

Second job

Side hustles don’t work for everyone. So you can always take on a part-time job in addition to your regular one. Work weekends, evenings, or whatever schedule works for you.

You may be able to take on a job where you’re already familiar with the work, or you can branch out and try something entirely new.

But is working two jobs worth it? Make sure you have the time for this before taking on another job.

5. Define your money goals

Even though your income varies, it doesn’t mean that you shouldn’t plan for the future! Come up with a couple of money goals, then consider how much you want to save.

Even if it takes a while, getting started with your goals will help you to build momentum and know that you are moving in a positive direction with your money. 

Including saving for your goals before discretionary spending in your budget is also a good way to make sure that you make progress.

Here are some examples:

Prepare for retirement

There are quite a few ways to do this, from a 401k if you have the option to IRAs or regular investing. While retirement planning can seem overwhelming, it’s actually not too difficult to get started.

Try using a retirement calculator to find out how much you should save each month and year, and then start contributing now!

Plan your vacations

Just because you have an income that varies doesn’t mean there’s no room in the budget for fun! If you love to travel, start planning a vacation to somewhere you’ve always wanted to go.

Be sure to total up the cost of the trip in a vacation budget and then set aside money with each paycheck or whenever possible.

Save up for education

If you are saving for your kid’s college education, or you plan to go back to school yourself, start saving up money and learn how to avoid student loans.

You may also wish to save for a professional goal. For instance, taking classes or gaining certifications in your career, may cost money and/or time.

Determine what time frame you’re working with (how many years until you need to use the money), as well as the full cost of the education. Then you can make a plan for your savings.

Expert tip: Determine how best to manage your irregular income

Although some people can work easily with an irregular income and don’t struggle with the paycheck uncertainty, you may find that it isn’t for you. If you find that even with a budget you feel concerned about your finances, it may be time to look for alternative solutions.

While having a varying income is completely fine, it’s totally okay to change this if you would feel more financially secure with a more stable amount of money each month. Look for a career that will allow for a steady paycheck, and continue with your budget and financial goals.

What is an irregular income with an example?

An irregular income is simply one that doesn’t pay the same every paycheck.

For instance, you might make $3,000 one month and $5,000 the next.

An income like this means that you will need to be diligent about budgeting and saving up your money for lower income months, or you may feel like you’re living paycheck to paycheck.

What is an example of an irregular income job?

An example of a varying income job is one that has varying hours, such as working in a restaurant that is much busier in the summer than in the winter. There may be times when there is more work to do and others when there is less.

Another example is if you have a job that takes on various projects, such as a freelance writer. If you are paid per project, your income can change quite a bit from one month to the next.

Can you budget with an irregular income?

Yes, you can budget with an irregular income. You simply have to prioritize and stay organized. It’s also very important that you create your baseline budget by factoring the minimum amount you need to spend on bills and also by using an average of your past income e.g. An average of how much you earned over the last 6 months.

By budgeting based on your minimum expenses and average income you can put away any earnings over your average income to accomodate for any low income months in the future.

Be sure to pay your essentials first, then your savings goals, and then consider spending on non-essentials. Following this method will help you to pay your bills without worry.

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• 31 Ways How To Make Money Without A Job
• Budgeting For Couples: How To Budget As A Couple

You can budget successfully on an irregular income!

Putting a plan in place, regardless of your income, is the foundation of financial success in life. It’s all about managing your monthly expenses, whether there are fluctuations in your income or not.

Plan to revise your budget every single month, and if you fall short, each new month is an opportunity for better budgeting. Remember, you can be successful with your budget, create goals, and plan for the future!

The post Budgeting With An Irregular Income: 5 Success Tips appeared first on Clever Girl Finance.

Debt can make finances difficult and cause stress. That being said, it’s important to prioritize paying it off so you can focus on your other goals. The good news is that if you have the right mindset and you use these tips, you’ll understand how to pay off credit cards fast.

However, to get in the right frame of mind, it’s worth understanding why credit card debt is so bad.

Why debt can hurt your finances

Having debt from credit cards that you are unable to pay in full each month can impact your financial goals.

The worst-case scenario is bankruptcy (find out about types of bankruptcies). 

However, even the smallest debt owed to your credit card issuers can limit your ability in terms of how much you save and, in turn, how much you are able to invest. This is because your money goes towards making credit payments each month.

If you are able to create a debt repayment plan and knock down your credit card balance fast, you can then apply the money toward your goals. You can save and invest more and achieve your financial goals quickly.

How to pay off credit cards fast

Wondering how to pay off credit cards fast? Below is a list of 27 ways to rapidly knock down your credit cards (or other debt).

For the biggest impact, use a combination of these tips in your debt-repayment strategy. If you stay focused for a few months, you’ll be surprised by the difference these small changes will make in paying off your debt.

So here are our key tips on how to pay off your credit cards fast:

1. Develop the right money mindset

Your mindset is your thought process and the way you think about things. Having a positive money mindset when it comes to paying off your debt is really important because you empower yourself and tell yourself that you can get rid of it.

Studies even show there is power in positive thinking, according to U.S. Preventative Medicine. Paying off debt can take time, so you want to make sure you are mentally prepared.

Tell yourself things like “I can do this,” “Being debt-free is worth it,” and “Goodbye debt.” Not only should you tell yourself these things, but you need to believe them as well.

2. Create a budget for your spending

Creating a budget is your next step on how to get out of credit card debt. Here is an example of a budget to help you out!

Develop a spending plan each month that accounts for not only what to do with savings, bills, and debt payments but also any other spending, like unplanned trips to Target. Don’t add to your debt for these things.

A spending plan will help you be more mindful of your purchases. It’ll also provide a reference to compare what you planned to spend to your actual charges.

Consider checking in on your planned versus actual spending at least weekly. Doing so will help you take the guesswork out of what adjustments you’ll need to make to stay on track.

Then, you can avoid taking on additional debt.

3. Tally it all up and determine how much debt you owe

A big step in how to lower credit card debt is to determine how much you owe, to whom, and the associated interest rates. Bankrate’s credit card payoff calculator is a good place to start. I’m going to be honest and tell you that you can’t bypass this process.

It’s essential to figure out how much debt you have in total in order to create a plan of attack. And if that means breaking out your favorite glass of wine, playing some Beyonce, or calling up your bestie to get it done, then do it!

4. Create a financial plan; be patient and consistent

Get a financial plan in place to set goals, reduce credit card debt, save, invest, and create a good life for your future self.

While a budget is also necessary, it’s not the same as a financial planning process. A plan takes into consideration not just your bills and debt but where you want to be in the next few years and how much money you need to save and invest to get there.

A financial plan is a great way to figure out how to get rid of debt and help you stay focused and stay aggressive in becoming debt-free.

Give yourself time to make progress and start trusting the process to achieve the results you want. You might only be making a little progress at the start, but it’s all worth it.

5. Create a $1,000 emergency fund

It’s really important to have an emergency buffer even while paying off debt. If something happens, you can use this cash instead of going back to your credit cards.

Plan to contribute to your emergency fund a little bit at a time, e.g., $100 a paycheck. Also, consider opening a dedicated savings account, such as Christmas Clubs, for your emergency fund. It will help you to avoid accessing the funds until necessary.

6. Work out the fastest way to pay off credit card debt

You will eventually repay your debt by making your minimum credit card payments. As long as you don’t add any more charges and your interest rate remains fixed.

But it’s essential to create your own debt reduction strategy. Creating your own debt strategy will allow you to get out of debt sooner.

Two popular options for a debt management plan are the debt avalanche and debt snowball strategies.

With the debt snowball method and debt snowball worksheet, you’ll tackle your smallest balance first. As you eliminate one source of debt, you’ll move your minimum payment plus any extra funds set aside for debt repayment across to tackle your next-smallest debt. Your snowball will keep growing as you tackle larger and larger debts until you’re finally living debt free.

The debt avalanche vs snowball method is focused on the interest rates attached to your debt. In the debt avalanche method, you’ll start by paying off the loan or credit card debt with the highest rate before moving on to the next highest interest rate. It has an avalanche effect on the remaining amount you owe.

Take a look at your individual debt pile, and work out whether the snowball or avalanche method will be the fastest way to pay off credit card debt in your situation.

7. Stop all spending on credit

Once you decide you are done with debt, you need to be REALLY done with debt. Not making room for debt in your life means using your debit card instead and no more spending on credit unless you have to make payments that require a credit card. And in that case, you should be paying off those charges in full each month.

Otherwise, grab your Ziploc, put in your credit cards, fill it with water, and throw it in the freezer!

Sometimes using your credit card is safer than using a debit card. Especially when it comes to online shopping fraud protection and travel protection. In this case, be sure you build that spending into your budget.

This approach is the fastest way to pay off credit card debt simply because when you stop increasing your debt, the only place for it to go is down.

8. Consolidate your debt into lower interest rate payments

You may be wondering, is debt consolidation a good idea for you? You can consolidate your debt into one monthly payment by transferring the balances from your different credit cards and loans to a new single credit agreement that has a 0% Annual Percentage Rate (APR) or very low introductory interest rate.

These lower interest rates will help you reduce the amount of interest you are paying back. Keep in mind a debt consolidation loan only makes sense if you can pay off your debt within the time frame of the low introductory rate.

Depending on your credit score and the amount of debt you have, you may want to consider transferring your credit card balance to a 0% APR card.

However, be careful when taking this route because you’ll need to pay off your balance before the promo rate expires.

Otherwise, the rate can skyrocket, and you will end up paying costly interest on your debt. So, if the 0% APR offer is for 18 months, you need to figure out if you can afford to pay it off within that amount of time.

Also, if you do transfer your balance, commit to not using the existing card (or even close it!). The last thing you want to do is have another credit card lying around, especially if you have a shopping addiction.

9. Consider a balance transfer card

Part of your debt consolidation plan may be to apply for a new balance transfer credit card offering 0% interest. Balance transfers let you move your debt to a new credit card in place of the old one. (First, find out how do balance transfers on credit cards work.)

There is a balance transfer fee associated with the debt you’re moving across to your new card issuer. After all, credit card companies want to make money off the deal.

If you want to know how to pay off credit card debt fast, then chances are you might be in a rush! But be sure to read the fine print very carefully so you understand exactly how your balance transfer card works.

You also want to make sure you have a good sense of how the interest is applied. Look out for higher interest rates kicking in once the intro period has expired.

10. Pay more than the minimum payment

Whether you have a personal loan, auto loan, or credit card, your lender will specify the minimum payment you must make each month. But this is often a very small amount.

Paying more than the minimum saves you money on monthly interest payments, which in turn will help you with how to use credit cards wisely, in addition to how to pay off credit cards fast.

Make it a goal of yours to pay as much as you can each month towards your debt to reduce the amount of overall interest you’ll be paying back to your creditors.

11. Reduce the number of credit cards you own

A key tip on how to lower credit card debt is to reduce the number of credit cards you have. You don’t need 5-10 credit cards that are tempting you to spend money you don’t have.

Everyone is different, but most people have at least three credit cards, according to Investopedia. Credit cards can be useful when used correctly.

As long as you can learn how to stop spending money, having three cards allows you to carry two cards and leave one in a safe place at home.

However, you should have a rainy day fund so you don’t have to rely on your credit card if an emergency pops up.

12. Use non-retirement or non-emergency savings

Got money sitting in a savings account earning little or no interest? You might want to consider using those funds to pay down your debt.

Why?

Well, if you look at the big picture, you’ll see that the interest you are paying on your credit card is not worth the pitiful interest rates you’re earning on your savings account.

Once your debt is paid off, you can put the money you would have otherwise made on high-interest credit card payments toward savings.

Caveat: If the money you have set aside is your emergency cash, it’s important not to touch this in case of an unexpected expense cropping up.

13. Sell stuff you no longer use

You can make some quick cash by getting rid of things you don’t use.

For instance, electronics, clothing, shoes, and accessories you’ve never worn or no longer wear.

You can use online sites to make your sales, like eBay, Facebook Marketplace, and Poshmark. Alternatively, check out your local consignment stores.

Tip: Price your items competitively and review the feedback of your potential buyers very carefully before you sell.

14. Start a side hustle

Are you good at a particular craft? Do people compliment you on your skills all the time? When it comes to how to pay off credit cards fast, maybe it’s time you start charging for those skills by starting a side hustle to earn some extra income.

If you’re a pro at baking, crafting, graphic design, etc., why not earn some money with your talents and apply it to your debt?

15. Get a part-time job

If running your own side hustle is not your cup of tea, consider getting a temporary part-time job until your debts are paid off. Be sure to remind yourself why you are working the extra hours – because you’ve been eager to learn how to pay off credit cards fast and get rid of your debt.

Choosing one of the best work from home jobs could be a great way to earn some part-time income.

16. Cut cable

Cutting cable can also save you a lot of money each month. If you’re not an avid sports fan, you might not miss cable at all. There are also tons of cable alternatives.

Consider switching to an online streaming service like Netflix, Hulu, or Amazon Video (included with Amazon Prime) to save some extra cash until your debts are paid off.

17. Lower your cell phone plan

Cell phone plans can get crazy expensive, especially when it comes to data. Try calling your service provider to see if there are any specials or offers they can give you for being a loyal customer.

Otherwise, consider downgrading your plan to one that costs less. It will lower your monthly expenses so you can put more money towards debt payoff. It may even help you learn how to spend less time on your phone.

18. Take lunch to work every day

Eating out every day adds up, especially if the average lunch is $10 to $15 dollars.

Instead, plan your lunches for the week based on what you have at home, or try these cold lunch ideas. Groceries are less expensive overall than takeout.

Budget meal planning is a great way to get creative and reduce your food spending, which can add up quickly. You can also check out our 30-day meal planning challenge for some motivation!

19. Skip the movies and nights out for a couple of months

Movies and nights out also add up. Don’t want to give up going out? Then skip the ridiculously priced popcorn and beverages at the movies and plan to skip the alcohol on nights out.

These items are heavily marked up, and you can put that money towards your debt instead.

20. Carpool with co-workers

Do you have any co-workers who live close by? See if you can set up a carpool schedule to save money on the amount of gas you purchase each week and put those savings toward your debt.

Carpooling saves money in the long run, and it doesn’t require much extra effort.

21. Cut down on your grocery spending

Saving a few dollars off your bill by frugal grocery shopping can go towards your debt repayment. Do you really need all those ice cream flavors?

Before you hit up the grocery shop, make sure you have a list and a full stomach. This way, you don’t get sidetracked by buying what you don’t need or by wanting to buy something to eat right away while you are there.

22. Cancel unused memberships at the gym

If you barely go to the gym, why waste money on a subscription that you could use against your debt? Love working out? Try working out at home or outdoors and see how you feel!

There are so many amazing and free workout videos on YouTube. Plus, apps like Nike Training Club and Nike Run Club offer free workouts as well!

23. Put any extra money you make like tax refunds and bonuses toward your debt

Those refunds and bonuses can make a huge impact on your debt and help you gain momentum to pay it off. But maybe you’ve been waiting all year to treat yourself. That’s okay, but think of how much happier you’ll be with no debt.

Plan to put most of that extra cash against your debt and learn how to pay off credit cards fast.

24. Contact a credit counseling service

If you’re really struggling with how to lower credit card debt, it may be worth speaking to professional credit counselors. They can help you come up with strategies to pay down your debt faster.

A credit counselor may negotiate on your behalf with credit companies to get you a lower interest rate and make your situation more manageable.

If you want to reach out to a credit counselor, the best place to start is by understanding how to find the right counselor. The Federal Trade Commission explains you can look for reputable counselors at universities or credit unions and check out resources such as your state consumer protection agency for complaints, in addition to other background checks.

25. Build up a cash cushion

A lack of a financial buffer to cover an unexpected cost can contribute to credit card debt. That’s why it’s important to build up a cash cushion to avoid creating new debt when these situations come up.

A cash cushion can be separate from your emergency fund, and it can cover things like variable or one-time expenses or anything that you forgot to budget for.

If you’re wondering, “How much should I save each month?” review your last twelve months of spending. Identify the total amount of unexpected expenses you charged on credit. Use this as your initial cash buffer goal.

26. Automate your payments

Learning to automate your finances can help with your debt freedom journey.

However, it’s important you pay more than the minimum. Figure out your debt payoff plan, then budget your payments to be automatically transferred for that amount.

For example, let’s say you have an additional $200 a month to pay toward your debt. Set up an automatic payment of $200 every month to knock down your balance fast.

Automating your payments will prevent you from paying your bill late and keep you on track toward becoming debt-free!

27. Find accountability partners

Getting an accountability partner is one way to ensure you don’t slack on your new responsibility of debt payoff, which will allow you to achieve your short term savings goals as well as more long-term goals.

Their job is to assist you along your journey, motivate you, keep you grounded and focused, and help you prioritize your goals.

Expert tip: Pick a few ideas and get started

There are a lot of ways to pay off debt. But to avoid overwhelm, remember this: the most important thing is to make a plan and a budget.

From there, you can decide on a couple of ideas that you want to pursue, such as reducing the number of credit cards you own and carpooling to work.

Choosing a few things to do and getting started is better than not doing anything at all because you don’t know where to begin.

What are the best 3 ways to pay off credit card debt fast?

The best 3 ways to pay off credit cards fast include using the debt avalanche or the debt snowball method or earning more money to put towards debt payoff.

The first two are methods you can use to determine the order you pay off your debt. The avalanche method involves paying the debt with the highest interest rate first, and the snowball method involves paying the smallest debt first.

But another idea to add to these is to make more money by trying some unique side hustles or asking for a pay raise and using all the extra money to get rid of your debt that much faster.

What is the fastest way to pay a credit card bill?

The fastest way to pay a credit card bill is to find one method to use for debt payoff and stick with it. If you spend too much time deciding on what is the best method and you never get started, it wastes valuable time.

You can choose any method or idea for paying off debt. Just make sure that you really are focused on it, and you’ll see progress.

How do you pay off $2,500 in credit card debt fast?

The best way to pay off $2,500 in credit card debt fast is to earn some extra money. $2,500 might seem like a lot, but if you take on a temporary side job or do some freelance work, you can likely pay it off in no time.

So earn some quick cash and get rid of that debt!

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• Key Tips For College Student Credit Card Debt
• How To Use Credit Cards Wisely
• The Advantages And Disadvantages Of Credit Cards
• 5 Tips To Stop Paying Credit Card Debt And Stop Worrying About It!

Now you know how to pay off credit card debt fast!

Implementing one, some, or all of these 27 tips will definitely get you well on the way to learning how to pay off credit cards fast.

You might start out only being able to afford small amounts, but those amounts really do add up. Every single dollar you pay counts and will make a difference toward staying out of debt. Don’t forget to build your repayment plans into your budget and track your progress.

Remember, you are doing all of these things for a reason, and that is to get and stay debt-free, so keep thinking about that – it will be well worth it in the end. Focus on the good and keep track of your progress, and you will succeed!

The post 27 Tips For How To Pay Off Credit Cards Fast appeared first on Clever Girl Finance.

Spending money never gets old, does it? While it’s easy to spend more cash than you mean to, it’s equally difficult to learn how to stop spending money. But it gets easier when you know the benefits of spending less and have a game plan for the future!

Each year, more and more Americans find themselves in debt. In 2022, the average consumer had $5,910 in credit card debt, according to Experian.

Meanwhile, as shopping sites such as Amazon continue to dominate, the opportunities to spend have gotten increasingly attractive, even as we wonder how to stop spending money.

If you open your browser, you’re met with many ads offering products that fit your unique set of interests. You may find yourself caving in month after month and buying things you don’t need.

And now, you’re ready to stop the shopping binge days and start saving. Below, we’ll discuss some key tips on how to stop spending money you don’t have.

Why do people over spend?

Overspending is quite common, and there are many reasons this can happen.

A lack of planning or failing to budget is one of the big budget challenges. Even with the best intentions, creating and sticking to a budget is not always easy, so people may spend more than they intended simply by not planning or forgetting about their budget.

There is also the tendency to buy things on impulse.

For example, if you forget to grocery shop or plan meals in advance, you may end up impulsively buying takeout. Or perhaps you see a new handbag or scarf that you didn’t plan to buy, but you decide to spend the money anyway.

There are many more reasons, but these are some of the things that may cause people to spend more than they plan to.

How to stop spending money: 5 Key focus areas

When it comes to over spending and ways to stop spending money, focusing on these five areas can make all the difference. They are:

1. Eating out and uneaten food
2. Clothing and accessories
3. Expensive coffee
4. Unnecessary things
5. Credit cards

Let’s get into each of these money spending problems in more detail below. We will also discuss the specific actions you can take to learn how to stop spending so much money in these areas and how to avoid big overspending mistakes.

1. Take control of your food costs: Eating out/uneaten groceries

It’s been a long week, and the last thing you want to do is stand in front of the stove and cook. So what do you do? Punch in an online order, throw your feet up on the couch, and turn on your favorite Netflix show.

While this sounds like an amazing evening, it could set you down a slippery slope into a life of little to no savings. On average, an American household spends $3,008 eating out each year, according to CNBC. Those $20-$40 meals add up really quickly, don’t they?

Or here’s another scenario. You happen to be walking past your local grocery store and suddenly remember that your food supplies are running low. As you walk down the aisles, you make educated guesses on what ingredients you’re missing because your memory is still sharp, right?

Wrong. When you get home, you realize you still have eggs, there’s the fruit you had forgotten about, and bread tucked away in a corner. Yet, you bought all these things again.

Now you have duplicates, and you know some of them are going to go to waste.

Under these circumstances, what can you do to stop spending so much on food? How can you balance your hectic schedule with a need to eat food quickly, conveniently, and affordably?

Make a shopping list

If you don’t have a list, stay away from the supermarket. A list guarantees that you stick only to what you need, eliminating any guesswork in the process.

Grocery shopping on a budget is way easier when you plan what you need to buy in advance.

Learn to say “no” when you need to

If you’re in the red every month but still find yourself going out to eat when you can’t afford to, you need to reevaluate your spending habits. Realize that you’re not saying no to friendships, you’re learning how to say no to a lifestyle that derails your budget.

Have quick and simple go-to recipes for days when you just don’t have time

It happens. Life gets busy. And the temptation is to simply order food online and call it a day.

The wiser thing to do is to store your own set of go-to recipes that are really quick and easy for nights when you just don’t have time. Pinterest has a ton of great quick and easy-to-make meal plans. Many of them come with grocery shopping lists too!

Or try out an eating clean on a budget meal plan.

2. Stop spending money on clothes you don’t wear

Have you ever had those days where you looked so good that you were oozing with confidence and getting many compliments about your outfit?

If you think about it, a lot of the time, it’s not because you were wearing something new. Rather, it’s because you looked good in what you were wearing. The color made your skin glow, or the fit was perfect on you.

New clothes don’t always give us the satisfaction we crave.

In fact, they can sometimes go unworn in our wardrobes because we realize that what seemed like a perfect idea through the fancy fitting room light was not so exciting once we got home. So we just forget about them while they gather dust in the closet.

There’s got to be a better way. Here’s how:

Create a capsule wardrobe

This consists of a limited number of quality staple items you can mix and match throughout the year. You can learn how to build a capsule wardrobe and also have great style.

Take good care of your clothing

Taking care of the clothes you already have helps to avoid the need to constantly replace them. This, in turn, means less spending.

Remember that wearing clean and well-laundered clothes goes a lot further as one of the confidence building exercises than spending money on new items.

Learn to use accessories to revamp an old outfit

An outfit is more than a piece of clothing. Rather, it is a comprehensive look that consists of hair, shoes, and accessories. An old look can look completely new with any items switched around.

3. How to stop spending money on expensive coffee

We get it. Drinking coffee is like breathing air for some people. It can truly make or break your day.

Most Americans spend an average amount of $1,097 on coffee each year, claims Zippia. But you can save money and still reap the benefits of caffeine.

If you’re an avid coffee drinker, you have a lot of options to help you keep the costs down and learn how to stop over spending. For instance:

• Brew your coffee at home, as you can easily save $20+ a week doing so.
• Test alternatives such as a good tea which often contains good doses of antioxidants and minerals
• Use cutting down on coffee as an excuse to ramp up on drinking water or other healthy alternatives such as coconut water.

4. Stop spending money on unnecessary things you don’t need

Shopping has never been easier. At the click of a button, you can have exactly what you want at lightning speed. Thanks, Amazon.

As exciting as that is, it can also be counterproductive if you fall prey to shiny object syndrome. You might be wondering what that is.

Simply put, you’re a victim of shiny object syndrome if you’re easily swayed into buying items at the moment. You’re driven more by your wants vs. your needs, and you make purchase decisions very quickly. You may even find that you have a shopping addiction.

To put a stop to this, you can deploy a few tactics:

Stick to cash

Using cash automatically prevents you from buying unplanned items online. It also restricts spending in-store, forcing you to stick to cash.

It’s also a good idea to determine, “How much cash should I have on hand?” so you’ll always be prepared for anything.

Track your expenses

Much of the time, when we are completely unaware of how much we’re spending, we are more likely to assume that there’s plenty more where that came from. Meanwhile, our bank accounts will be telling us another story.

It’s important to keep track of your expenses, maybe by writing them down or looking at your bank account often.

Spend 5 minutes a day checking your bank balance

Related to the above, if you’re unaware of your bank balance, you will overestimate what you have available in your account.

So you should spend a few minutes each day checking your bank account, as well as any credit cards or savings accounts. Then you’ll be reminded of purchases you made and bills that are paid or not paid.

Know what triggers your spending

Are you spending more when you’re with friends? Wondering how to stop online shopping? Walking through shopping malls?

One key to curbing unnecessary spending is to know yourself and be in tune with when you spend more. 

Also, understand what items you tend to overspend on, be it luxury clothing, entertainment, or impulse buying.

Give yourself a few days to think

Sometimes, time to really think through whether an item you’re thinking of purchasing is worth it can help you gain clarity on whether to spend money on that item or not. Taking a couple of days to decide if you truly need to buy something can help you cut down on impulsive purchases.

Prioritize needs vs wants

Knowing the difference between a want and a need and deciding how to prioritize is a skill that you can learn over time.

A need is something you have to have to survive. It includes mortgage and rent payments, food, clothing, phone and internet access, insurance, etc.

A want is anything that you don’t need.

For example, gym memberships, traveling, fresh flowers for the house, a new car, these are things that you may want, but you don’t need to live your life.

Once you define needs vs wants, and you determine that needs are much more important, you can prioritize the things you want so you can decide what to buy and what not to.

5. Stop spending money on your credit card

Credit cards can easily get you on the fast track into debt. If you struggle to exercise discipline with them, it may be best to completely stop using them. Credit card debt can limit families from investing and building wealth for their futures.

If you’re currently dependent on your credit card to help you with expenses, you need to have an honest self-evaluation. Determine if you’re depending on your credit card because you’re trying to build your credit score, you’re unable to keep up with your bills, you’re looking to build rewards from using the card, or any other reason.

If it’s causing you to sink further and further into debt, it’s time to take action. Here’s how:

Learn how to budget

While the thought of budgeting may make you want to run for the hills, this discipline could be the difference between retiring and working forever.

Better budgeting helps you fully know and understand where you’re earning and spending and helps you plan how to save.

There are many types of budgets to choose from, including the 80/20 budget and the 50-30-20 rule.

Ditch the cards and carry cash

It never fails. Carrying cash is by far the simplest solution to ridding yourself of credit card debt. When you stop carrying them around with you everywhere, it becomes less convenient for you to splurge on that unplanned item.

Alternatively, you can use a digital envelope system if you don’t want to carry cash but want to keep track of your spending.

Cut up your credit cards

If you’re truly struggling to stop using the cards or you have a shopping addiction fueled by credit cards, you may need to take more intense action, which would be putting them through the shredder. 

A spending freeze on credit will be worth your while. Cutting up your credit cards can help you to stop spending on credit because it will be so inconvenient.

Expert tip: Focus on improving your habits

Overall, learning to spend less and be mindful of your money is a habit. So make it easier for yourself to create this new habit by carrying cash, checking your bank account, etc.

If you will take the time to build new money ideas and patterns into your life, you will see improvement with your spending. Even if you don’t see progress for a while, don’t give up, and you will learn to control your money!

5 Tips to help you be mindful with spending money

The most important thing with spending is to be aware of how much you’re spending and what you tend to spend money on. Here are some ideas to help:

Step 1: Know your why

When you start off with financial goal setting—for instance, to learn how to stop over spending—you need to have a reason you want to change.

In other words, you need to have a WHY. Having this reason in place is one of the things that will keep you motivated to achieve your financial goals (in addition to working on your self-discipline and building new habits).

Your why could be your children, buying a house, or moving to a different city. Whatever that thing is that you dream of or want to look back and be proud of.

Take photos of it, save it on your phone, and set calendar reminders—basically, you want to make sure your WHY is always in focus in your everyday life.

Step 2: Identify your triggers

The next step if you’re wondering how to stop over spending is to determine what causes you to overspend.

Do you find you are spending more when you hang around certain people? Is it when you see what people post on Instagram? Or when you drive by the mall?

Once you figure out what your spending triggers are, then it’s time to address them. It could mean spending less time with the people that you find yourself spending the most money around. Or maybe unfollow people on Instagram, or take a different route so you don’t have to drive by the mall all the time.

Identifying and addressing your triggers, especially in the early stages of working on your spending habits, will help you stay on track.

Step 3: Learn how to budget and go on a cash or debit card diet

Having a budget is how you track your income and expenses. Once you are able to track your income and expenses, then you’ll know how much you have left over to spend/save. A good idea is to track your current spending for 30 days to see exactly where your money is going and determine what you need to cut out.

Once you are able to track your expenses for 30 days, you will very likely find areas of unnecessary spending. Eating out, daily coffees, shopping, unused gym memberships, and subscriptions are things you can cut back on, which will help with cutting the budget.

You may find that a lot of your spending is unavoidable, and you cannot cut it out right away. Things like being tied into a lease and having to pay rent or being in the middle of a remodeling project at your home that’s costly to terminate.

If you’re in this situation, then consider how to increase your income. Find a better-paying job, a part-time job, or even start a side hustle to bring more money in.

Next, consider ditching your credit cards. Go on a cash/debit card diet where you designate a fixed amount of money that you can spend every week or month. When it runs out, you are done spending until the next month.

Step 4: Automate your bills

The final piece of the puzzle involves automating bills and learning how to automate your finances. Automation saves you quite a bit of mental work at the end of each month. It simplifies the decisions you need to make around your finances, and it ensures that you do not suffer from any decision fatigue that will leave your finances in shambles.

Automation can be done across your bills, investments, debt payments, and other recurring expenses.

Once you have direct deposit set up with your employer, you can focus on setting up automatic bill payments.

Since you likely have multiple expenses, you will want to sync up the bill payment dates so that they align with your direct deposit. You can do this by calling each of your billing companies and asking them to reset the billing cycle to match your paydays.

Step 5: Create goals

A big part of budgeting and knowing what you want to use your money for involves creating goals. Without goals, overspending is easy because you won’t have planned something more worthwhile to spend your money on.

So decide on a couple of important things that you want to spend your income on. You may choose as a goal an emergency fund, a vacation, debt payoff, or retirement savings.

It’s up to you, but the best goals to have will allow you to make much more progress than just paying your bills and then not knowing where the rest of your money went.

I’ve learned how to stop spending money, now what?

Now that you’ve mastered how to manage your spending, you can shift gears into thinking about what to do with the balance of your funds. Thankfully, you have quite a few options that will set you up for a stable and happy retirement. You can either:

Save more money

Saving money is all about habits. Once you manage to curb negative spending habits, you can focus on building healthy savings habits, such as saving money in a jar or starting a rainy day fund.

According to Bankrate, less than half of American adults have enough saved to pay for 3 months’ worth of expenses if needed. Saving money will help you build that cushion in emergency funds to meet any unexpected costs.

Pay off debt

Paying off debt, whether consumer or education loans, should always be a top priority, as the consequences for not doing so on time can have broader implications for your finances.

One effective way to tackle your debt, if you have multiple sources of it, is to use the debt snowball worksheet, a method that prioritizes paying off your smallest debts first to help you achieve quick wins and eliminate the overwhelm of paying down large debt.

Invest

Once you’ve tackled your debt, you can then focus on how to start investing and creating a strong investment strategy. You’ll want to ensure you have a retirement account set up where you are regularly making contributions.

If your employer offers a match, make sure you are signed up for that. With any investment strategy, it is important to invest for the long term in order to maximize your returns and to ignore any short-term volatile movement in the stock markets.

Personal development

In today’s economy, it has never been more important to remain up to speed on self improvement ideas and make a plan for personal development.

Technology is rapidly changing, and the skills you had five years ago might not be as relevant as they were back then. Investing in your own periodic self-development will go a long way in keeping your skills fresh for today’s job market.

How can I reduce my mindless spending?

Reducing mindless spending is a matter of being intentional with your budget and fully considering a purchase before buying it.

For instance, if you want to buy a new pair of shoes, a book, or a new phone, consider a couple of things. Is it a necessary purchase, is it within your price range, etc.?

By being more intentional and taking time to think, you can get rid of mindless spending.

How do I stop spending money for 30 days?

If you feel that your spending is out of control, you can stop spending money for 30 days by doing a no spend challenge.

Determine to buy only what is necessary (essential bills only) and then save the rest of your money for one month.

There are plenty of ways to do a no spend challenge, so find a method that works for you.

Why can’t I stop spending money?

You may not be able to stop spending money if over spending has become something you do all the time. But a habit of spending money can be broken, just like any other money habits.

You can try a no spend challenge, get an accountability partner, or focus on budgeting to help you spend less money. The most important thing is to be aware of this struggle and take positive steps to improve your habits.

How do I stop spending money when bored?

Spending money when bored may be a common problem, but there are plenty of low-spend or no spend activities you can do instead.

Try making a list of free activities that you can do when you’re bored. When you’re tempted to spend out of boredom, look to the list! It might include things like:

• Go on a walk with a friend or a pet
• Check out free museum days or look for free festivals in your town or city
• Watch a movie
• Exercise
• Spend time with a family member or close friend
• Learn about a new subject by reading articles or checking out books from the library
• Read our post about what to do at night when bored

Articles related to how to stop spending money

If you liked learning about not spending money, read these posts next!

• 5 Tips To Stop Paying Credit Card Debt And Stop Worrying About It!
• 8 Tips For A Successful No Spend Month
• How To Stop Eating Out So Much! 7 Tips
• How To Be Better With Money: 10 Key Tips

Start working on how to stop spending money randomly!

Curbing your over spending could truly be the start of a different financial future for you and your family.

While it may seem daunting, you need to remember that spending money boils down to habits you build into your day, and you can start challenging yourself to make different choices.

If you can truly isolate some patterns that may be holding you back financially, you’ll be well on your way to not only reducing your spending but also learning to follow your dreams for a secure financial future.

The post How To Stop Spending Money: Curb Your Over Spending appeared first on Clever Girl Finance.

Like many, you might shudder at the word budget, or perhaps it sounds too boring or challenging to figure out. But the 50-30-20 rule and the 50 30 20 budget template prove it doesn’t have to be difficult. If you’re looking to simplify your budgeting process or are new to budgeting, then this might be the perfect match!

Using budgeting best practices means planning out exactly how you’ll use your money, and this can be tailored to suit your specific lifestyle and situation with the 50-30-20 rule. This particular budget involves three easy steps that will help you prioritize your monthly financial commitments.

The 50-30-20 rule is comprehensive and covers all bases. And don’t worry if math isn’t your thing because we’ve included 50 30 20 budget spreadsheet ideas to help you stay on top of your budgeting strategies.

That said, let’s take a close look at this budgeting rule, including what it is and how it works.

In addition, we’ll include calculators so you can jump right in and get started immediately.

What is the 50-30-20 budget?

In its simplest form, the 50-30-20 budget rule divides your after-tax income into three distinct buckets, which are:

• 50% to needs

• 30% to wants

• 20% to savings

A plan like this helps simplify finances and is also easy to follow.

Who invented the 50-30-20 budget?

U.S. Senator, Elizabeth Warren, came up with the 50-30-20 budget. In a book called All Your Worth: The Ultimate Lifetime Money Plan, Elizabeth Warren and Amelia Warren Tyagi described this simple way to budget.

And not surprisingly, it has stuck. People love how easy it is to understand and follow!

Why this rule works

You might be wondering why this budget works and how it will impact your life and financial plan. There are a few reasons it can be great for your finances.

Simplicity

Firstly, the budget is really simple. So if you’re not into details or if you’re just starting out, this budget is fail-safe and easy to implement.

You only focus on three buckets – needs, wants, and savings which are pretty easy to figure out.

Every dollar has a purpose

Secondly, it helps you account for every dollar.

You start off with your after-tax income, which represents 100% of what you have to work with, and then you work out the different spending groups from there.

Financial goals

Lastly, the 50-30-20 rule can help you stay focused on your financial goals and save up for large expenses such as a house or car.

Alternatively, it can also help you create a debt reduction strategy if that’s one of your initial goals.

Percentages for your budget

The 50-30-20 budget is divided into three parts. 50% for needs, 30% for wants, and also 20% for savings. And remember, you can always use a 50 30 20 calculator or even a 50 30 20 budget template to create yours.

Category 1: 50% needs

The 50% needs category is for all your monthly essentials. Essentials include things you simply cannot live without.

For instance, rent or mortgage payments, healthcare, groceries, car expenses and payments, utilities, and also debt payments.

So as you can see, when budgeting for needs, you only include the necessities you need to survive. It would not include entertainment, take-out, or fine dining.

How to save to stay within the 50% rule

You should be able to comfortably meet your needs with 50% of your monthly income after tax. If you’re spending more than this, you may want to re-evaluate.

Are you paying too much for rent? Are you spending more on transport than you can afford?

Do you spend a large chunk of money on weekday lunches? These are all good questions to ask yourself.

Whatever the case, you can make immediate changes to your spending and also improve your budget with the 50-30-20 rule.

For instance, consider moving to a more affordable home or using public transport to keep costs down. Additionally, you can use cold lunch ideas and make your food at home to bring to the office.

Category 2: 30% wants

Wants are all the “nice to haves” that you spend money on with the 50-30-20 budget. These are items you definitely don’t need, but perhaps they are fun, or they add to your life in a positive way. And that’s OK!

The aim is to keep a detailed budgeting plan so your spending habits and fun money don’t get out of control!

The list of wants is endless and also differs from person to person, depending on your lifestyle.

For example, your personal list might include going out to the movies, eating in restaurants, buying new electronic gadgets, buying a pre-owned designer handbag, or tickets to a big game.

Another person’s wants might include cable TV or a Netflix subscription, going to concerts, and paying for gym memberships.

Consider alternatives to large expenses

Remember: there are many good substitutes for wants that cost little to nothing.

For example, you might want to buy the latest iPhone but can’t afford it. Instead, buy an earlier version, and you’ll still get the same benefits.

Alternatively, fitness fanatics who can’t justify the cost of signing up for the gym could work out at home instead.

There is almost always a cheaper alternative available when you’re looking to purchase an item. But feel free to balance your needs vs wants so you still enjoy some of these activities from time to time.

Wants may sometimes include premium experiences that are beyond reach financially. Decide what you can afford using the 50-30-20 rule.

For example, someone may want a new BMW when they can easily have a nicely equipped Toyota that would cost much less.

Be mindful of your wants, as it can be easy to justify spending if you really want something. This idea is tricky to master.

Category 3: 20% savings

Arguably the most important category in the 50-30-20 budget is savings, as this can determine your future. Savings, in this case, refers to both savings and investments.

Savings can take many forms ranging from your emergency cash to your savings account. It can also include any money market investments you have.

Keep in mind that investments refer to any money you have set aside to generate income. It can include investing in the stock market, purchasing real estate, or setting up your retirement accounts.

Priorities for saving

Your top priority should be your emergency fund. It is important to have 3 to 6 months’ worth of living expenses saved in your emergency fund.

Beyond that, focus on your retirement savings. These can include putting money into your company-sponsored 401(K) plan or an IRA. You might ask yourself, “Do I need a financial advisor?” and you can consider hiring one to help you set this up.

How to use the 50-30-20 rule to create your budget

The 50-30-20 budget rule is very simple, and it only has a couple of steps to get started. Here are some tips to make sure the budget works well for you.

Know what your income is

To get started, you need to figure out your after-tax income.

After-tax income is simply the amount of money you have left over after taxes are paid. These taxes include federal and state, in addition to Medicare costs, and don’t forget about social security.

Note: Don’t be confused by your gross income, which is the salary you earn before tax deductions have come out. We’re looking purely at how much money you have left in your bank account to divide it into your three main categories.

If you want a quick and easy way to figure out your take-home pay, simply look at your paycheck stubs.

If you run your own business or are starting a side business, you’ll still calculate your after-tax income. All you have to do is take your gross income and subtract your business expenses and also any state and federal taxes.

Split your income into the three categories

Once you’ve figured out your after-tax income, the fun begins. It’s time to split your income into the three spending groups.

You can do this by creating your own budget or by using the 50 30 20 budget template.

And then you’re all set! All you have to do is keep track of your money and also make sure you stick to the budget.

A quick note on paying down debt

Do you have credit card debt, a personal loan balance, or perhaps student loans to pay back? Debt payments fall across both your needs and your savings categories with the 50-30-20 rule.

Why? The minimum payment you owe on your outstanding debt is a need in that you must pay it back and also pay it on time each month.

But only paying back the minimum amount is a slow and expensive way to tackle your debt.

Instead, we recommend contributing to your savings so you save money to pay off your debt faster and start living debt free.

The saved money can go towards the principal, effectively saving you money in paying future interest payments down the road.

Expert tip: Customize your percentages

While it’s important to stay close to the percentages of the 50-30-20 rule, it doesn’t have to be exact for it to work.

For example, if you actually spend 53% of what you make on necessities, this budget will still work relatively well for you.

On the other hand, if you find that your percentages are very different, you may want to consider another percentage budget that will work better for your income and lifestyle.

Examples include the 80/20 budget, the 60 20 20 rule, the 70-20-10 budget, and the 30-30-30-10 budget!

A 50 30 20 budget template you can use

If you haven’t already set up your budget, this 50 30 20 budget template is easy to use. Simply add your own budgeting amounts.

Below is an example with possible amounts included.

Total net income per month: $5000

As you can see, you can add whatever amounts you want to this 50 30 20 budget template and then use the percentages listed to create your own version of this budget.

You can also add different budget categories if needed, but this works well as an example.

Additionally, here is an actual budget worksheet to download. You can lay it out based on the 50-30-20 split discussed. Just click the image below!

DIY 50 30 20 budget spreadsheet

Another option is to set up your own 50 30 20 budget spreadsheet.

If you’re great with Excel or Google Sheets, you’ll enter your post-tax income into a single cell and set up calculations to convert this into corresponding 50%, 30%, and 20% categories.

50 30 20 calculators

Figuring out your budget doesn’t have to be difficult.

Here are some examples of a 50 30 20 calculator.

Banzai calculator

The Banzai calculator will ask you to enter your post-tax income, and it does the rest for you!

You’ll easily see how much to allocate to each of the three categories for the 50-30-20 budget.

Credit Karma’s budget calculator

This option from Credit Karma is also helpful. It doesn’t calculate percentages, but rather, offers an overall picture of your budget.

Simply enter your income, along with your living expenses, other costs, etc. You will be able to easily see how much you have leftover each month and your amounts for spending, investing, and more.

Money Fit calculator

The Money Fit 50/30/20 budget tool is also a great resource.

It includes category ideas to help you see what you spend money on, and you can change the percentages to suit your needs.

Does the 50-30-20 rule apply to every budget?

The 50-30-20 rule does not apply to every budget, rather, it is based on your income and expenses. It can work very well for people whose expenses are approximately half their income.

However, if you find that your expenses take a larger portion of your income, then you may want to try a different budget.

Is the 50-30-20 budget gross or net?

The 50-30-20 rule is based on net income, not gross. You make your budget with the money that you have after taxes.

Otherwise, your numbers won’t be accurate because money still has to come out of your income for taxes, so you are overestimating the amount you have to spend.

What are the flaws of the 50-30-20 rule?

The flaws of the 50-30-20 rule mostly have to do with preference and income.

Your preference may be to spend more on savings and less on fun money, in which case you might not like the 30% wants category.

Even though it does have flaws, you may find that it works well for your lifestyle.

Is the 50-30-20 rule weekly or monthly?

The 50-30-20 rule applies to your monthly income and monthly expenses list. So the entire budget is based on what you make in a month.

Doing this budget weekly would be time-consuming and confusing, so it’s best to do this once a month and calculate your entire monthly income at one time.

Articles related to the 50-30-20 budget

If you enjoyed reading about the 50-30-20 rule, learn more about budgeting by checking out these articles next!

• 10 Of The Best Budget Templates And Tools
• 7 Money Ratios Every Clever Girl Should Know
• What Is The 60-20-20 Rule And How Does It Work?
• 10% Rule: Is Saving 10% Enough?

Leverage the 50-30-20 budget today!

Budgeting doesn’t have to be difficult, and this option is a great way to start your money goals quickly and easily, especially if you decide to use the 50 30 20 budget template.

Remember to use your post-tax income as your base and divide your money from there. Now that you have all the steps in place go ahead and get started!

P.S. Here are other budgeting methods to explore. The 80/20 budget, the 60 20 20 rule, the 70-20-10 budget, and also the 30-30-30-10 budget!

The post The 50-30-20 Rule: How It Works + A 50 30 20 Budget Template appeared first on Clever Girl Finance.

Hearing the word recession creates a feeling of discomfort for many. After all, recessions come with a lot of negatives, like stock market declines, job losses, and more. But you can learn how to prepare for a recession and still thrive financially.

Preparing for a recession is essential to your financial security.

Knowing how it affects the economy and your finances and taking key steps will help you during an economic downturn. Let’s get into what it all means and how you can prepare for a recession.

So, what is a recession?

A recession happens when there is a negative GDP for two consecutive quarters. During a recession, there is typically a decline in industrial and trade activity. Some major implications that come with recessions include job losses and a high unemployment rate. Also a drop in real estate values and a decline in investment values.

Economies work in a cycle. That means they go through periods of expansion and growth, as well as periods of decline known as recessions. Or, more severely, depressions such as the Great Depression in the 1930s.

One example is the great recession of 2008, which was triggered mainly as a result of the housing bubble in the United States.

It’s essential for us to know how to prepare for a recession, as it can impact our careers, lifestyles, and finances.

What changes during a recession?

Recessions can be damaging to stocks and assets, causing them to lose value.

A recession could also cause interest rates to drop. The Federal Reserve may decide to cut rates to make it cheaper to get loans and borrow money in an effort to try to stimulate the economy.

In addition, this means you will see rates drop on your savings accounts too.

The government debt may rise as they pass bills for stimulus packages to assist those in need. And also to help the economy recover.

All of this doesn’t mean you shouldn’t invest during a recession, though.

In fact, if you’re wondering is now a good time to invest, it can be if you do it right and work on tackling any stock market fear you might have.

How to prepare for a recession financially

Recessions happen, but you can be ready for them. Here are ten key tips for how to prepare for a recession.

1. Assess your overall finances

Before you start to make a plan for a recession, consider what your finances look like right now.

For example, what are you currently paying for in your monthly expenses list? You likely have some necessary expenses, such as your mortgage or childcare.

But are there things that you really don’t need or can afford to cut back on?

For instance, dry cleaning, hair and nail salon appointments, restaurants, etc. Perhaps you’re spending too much on non-essential things and living a champagne lifestyle that you can’t afford.

In that case, cut back for the time being so you can use your money for more essential matters.

2. Ensure you can cover your basics before you invest or pay debt

Perhaps you assessed your finances and found out some surprising things. If you can’t afford your current lifestyle, or you are struggling to pay your bills without debt each month, it’s time to make some changes.

For instance, before using my money for investing or paying off debt, I like to be sure that I can pay for all of my basic necessary expenses. Rent, groceries, insurance, etc., are all things to pay for before doing anything else with my money.

If you need to make more income to afford your basic bills, consider a side hustle or a second job. Then you can change your focus to paying off debt, investing, building an emergency fund, etc. Doing so can help you in your future by preparing you for a recession.

3. Bulk up your emergency savings and keep it easily accessible

As you work on getting your finances ready for a recession, it’s very important to have emergency savings in place. In a recession, having an emergency fund can save you a lot of stress. It acts as a safety net with enough money to help you during difficult times.

You’ll avoid becoming financially over-extended or having to leverage debt just to get by. The importance of savings cannot be overlooked!

Save 3 to 12 months of expenses

To start, you want to put aside 3 to 6 months’ worth of your basic living expenses in an emergency account in the unfortunate event that you become unemployed.

And since recessions can be pretty unpredictable, aim to boost your emergency savings to 12 months of your essential expenses to have extra money if needed.

That much cash will give you ample time to find a new job. But remember, jobs can be harder to come by in an economy experiencing a recession.

Keep in mind that your basic living expenses are the essential things you need to survive; food, housing, core utilities, and transportation. Building your emergency fund is one of the most important steps when preparing for a recession.

4. Diversify your investments

Ever heard the saying, don’t put all your eggs in one basket? Well, the same line of thinking applies to your investments.

It’s important to have a well-diversified investment portfolio, such as a 3 fund portfolio. That means your investments should not all be tied up in one stock or one real estate property.

You want to make sure your investments are spread across multiple industries and areas so that if one industry or area experiences a decline, one investment decision doesn’t sink your entire portfolio.

For example, if you invest in the stock market, you can spread your investments across multiple sectors such as consumer goods, healthcare, technology, etc.

Investing with index funds and mutual funds are both great ways to diversify. You can also choose to invest in the real estate market and in small businesses.

How to invest wisely

As an investor, be sure to do your research, be clear on your investment strategy and objectives, and understand how risk averse you are. It will create less panic for you if a recession comes along.

A big mistake people make is that they start selling every investment they own when the economy dips because of emotions like fear or worry. It’s a bad idea in the long run.

If you have a clear plan for your investments and you’re in it for the long term, you are in a good place. Your investment is likely to weather a bad economy and come out on top.

Talk to a financial advisor if you have any confusion or feel stuck regarding what to do. (Find out: do I need a financial advisor?) Prepare for a recession by diversifying your investments wisely.

5. Create a plan to pay off debt once your essentials are covered

The last thing you want to do is worry about having to pay off debt in a bad economy, especially with the increased rates of unemployment. When focusing on how to prepare for a recession, debt payoff should definitely be a factor.

Paying off your debt will save you a ton of money in interest payments and put you in a better financial situation. Plus, you’ll also be able to put your extra funds toward bulking up your emergency savings and other financial goals.

So, after your basic expenses are covered, as discussed earlier, you can start using your excess income to pay off debt or save.

Prioritize high-interest debt

It’s a good idea to focus on paying off your high-interest debt before you consider ramping up on investing (meaning investing more than your usual amount, though you should always invest some if you’re able to).

If you have high-interest debt the cost of your interest payments may far exceed the return on your investment.

For instance, if you have credit card debt that has a 19% interest rate, then it makes more sense to pay off that debt as soon as you can, given that the average long-term rate of return on the stock market is ~8% to 10%. Reduce credit card debt if at all possible.

Obviously, your rate of return could be much higher, but you want to avoid speculating or trying to time the market.

Once your debt is gone, you can focus on investing a higher percentage. Find out more about creating a smart debt repayment plan, like the debt snowball worksheet method, and learn how to start investing.

As a side note, if you have no other debt and your investments are on track, you might consider paying extra toward your mortgage to pay off that debt, too.

6. Refinance variable interest debt into fixed interest

Interest rates typically decline during a recession. That means you may be in a good position to refinance things like mortgages or think about the pros and cons of refinancing a car.

Having a variable interest rate means that it can change over time, so getting a fixed interest rate for any debt you have is usually ideal.

Take advantage of the possibility of debt being cheaper if it makes sense for you. Remember, refinancing only applies to the debt you already have.

A recession may not be a great time to take on new debt unless it’s necessary and you’re absolutely sure you can afford it. Always have a payoff plan, no matter what.

7. Learn how to budget and live within your means

Living below your means or at least within your means is the key to building wealth. It also means you eliminate having to leverage debt to live your life—no more using credit cards to pay your bills.

Find out how to prepare for a recession and still live within your means.

Use your budget to focus on financial security

Determine what budgeting style works best for you and learn better budgeting techniques. Your budget will help you track your expenses compared to what you earn and highlight areas you can cut back on.

Your ultimate goal should be to widen the gap between your income and expenses as much as you can. You do this by finding out how to increase your income and reduce your expenses. Spend on necessities instead of luxuries, as discussed earlier.

Any leftover money can be used to create financial security, which can primarily be achieved through saving, investing, paying off debt, and making your money work for you.

Make a plan about how much you want to save, what other income sources you can create, and how you’ll pay off debt. Then give all your attention and any spare money to those goals.

When you make progress towards your financial goals, refuse to upgrade your lifestyle. There will be time for that when you are in a better financial situation, but if you’re focused on preparing for a recession, then don’t spend on things you don’t need for now.

Continue with your plan, and you will be in a much better place with your money.

8. Find more ways to create multiple streams of income

Millionaires usually have several income sources, and for good reason. Creating multiple sources of income ensures that you increase how much you have coming in, and it can increase your peace of mind during economic uncertainty.

It also acts as a buffer in case you lose a source of income. Here’s how to get started with making more money.

Start a side hustle

Is there something you’re passionate about doing? Something you do that you get complimented on all the time?

Consider starting a side hustle to generate some additional income. There are also a variety of recession-proof businesses you can consider.

For me, starting a side hustle has helped me bulk up my savings, pay off debt, and just be generally more prepared for difficult financial circumstances.

Consider passive income opportunities

Setting up passive income sources is also a smart idea. Passive real estate investing like REITs (Real Estate Investment Trusts), royalties, and selling digital products like eBooks can all be sources of passive income that can help you in tough times.

Dividend investing can also be a passive income source, as can becoming a landlord. There are many opportunities, so as you consider the resources you have, find out which ones will work for you.

9. Dual income household? Learn to live on one income and save the other

One of the savviest financial moves you can make to prepare for a recession is to shift to living on one income and saving the other. Getting frugal with your budget and reducing expenses can free up a lot of money to save for a rainy day fund.

The goal is to reduce your cost of living enough to free up the second salary altogether.

You will bulk up your emergency fund and not rely on a second income in the event of a job loss. Living below your means is the best way to prepare for the unexpected.

10. Consider finding a recession-proof job if you are in the job market

Another way to prepare for a recession as an employee is to consider recession-proof jobs. Healthcare workers, teachers, and pharmacists are types of jobs in demand even during a recession.

If you aren’t looking for a job, it’s still important to be prepared. Expanding your skills is excellent for job security, especially when it comes to wages and working remotely.

Make sure to add any new skills to your resume to stay prepared in case someone is hiring for a job you’re interested in. 

Another idea for jobs is remote work. Companies are shifting towards remote positions now more than ever. Since the best work from home jobs are on the rise, you might consider applying for some or starting a home-based business.

While not every remote job is a good choice during a recession, it is helpful to have it as an option.

Expert tip

Recessions are going to happen, so it’s important to always know how to prepare for a recession. In my opinion, the best bet is to take the approach of being over prepared.

Try doing several things to improve your financial situation, such as budgeting, saving money, and looking for a new job or side hustle. The more you prepare, the better you will feel and the more your finances will improve.

How much money do you need to survive a recession?

The amount of money you need to survive a recession depends a lot on your savings and expenses, but a good place to start is by setting aside emergency cash.

You should try to have 3 to 12 months of your core expenses saved to prepare for a recession, and you can always have more than this if you think it’s necessary and for peace of mind.

In addition, having multiple income sources from several jobs or side hustles diversifies your income and can help you in a recession. With many income sources, your finances are less likely to take a big hit, even during a recession.

What should I buy in a recession?

You should buy things in a recession that are likely to be cheaper and make the most sense financially for example your core essentials. It’s a good time to invest, especially in stocks and potentially real estate.

Make the investments that you can afford after you pay your bills, of course.

Beyond investing, what you buy during a recession really depends on your goals and financial obligations. If you have savings and are doing well financially during a recession, you may be able to spend as normal.

Make sure you know how to spend money wisely before making unnecessary purchases.

What happens to money you have in the bank during a recession?

The money you have in the bank during a recession is generally still quite safe. Just be sure that your bank is FDIC insured (which will cover amounts up to $250,000 for each depositor), and you don’t need to worry about losing your money.

However, the interest rates for your accounts may drop, so this is something to be prepared for.

There is generally no reason to remove your money from the bank during a recession, and it’s unwise to panic and take out your investments, as well.

The best thing to do during a recession is to wait it out, knowing that the economy will return to normal and your money will still be in the bank. The stock market also does well generally over time, so leaving your investments alone is a good idea.

How much money should you hold in a recession?

The amount of money you should hold in a recession in cash is whatever amount you have for your emergency fund. 3 to 6 months of savings is the commonly accepted amount, and it will likely be enough to help you get through difficult times during a recession.

If you want to keep more cash than this, you can, of course. Even up to a 12-month emergency fund is a smart idea.

But beyond that, it is pretty safe to have your money invested in most cases. You don’t want to miss out on interest, after all!

How can you make money in a recession?

Knowing how to make money in a recession is all about looking for opportunities. Find a job that is likely to stick around during a recession e.g. a recession-proof job, start a side hustle, invest money, and look for ways to earn that isn’t affected by the recession.

Also, consider careers and money-making opportunities that thrive in a recession, like healthcare, grocery stores, etc.

In addition to this, continue to make money as usual by not quitting your day job, if possible. One of the best ideas for maximum financial security during a recession is to have a full-time job and a side hustle. The more hours you can work, the more prepared you are and the more financial wellness you have.

Articles related to preparing for a recession

If you enjoyed this article about preparing for a recession, you’ll like these other reads!

• 19 Best Recession-Proof Jobs For All Skill Levels
• Should I Buy A House Now Or Wait?
• 14 Best Recession-Proof Businesses Ideas You Can Try!
• What Is an All Weather Portfolio? Is it Right for You?

Start leveraging these tips on how to prepare for a recession today!

While we can’t predict when a recession will happen, it makes sense to always be prepared for major life events. Apply these tips for how to prepare for a recession properly and make good financial decisions.

That way, you aren’t taken off guard financially, and you will have everything in place to prevent financial disaster. Trying out extreme frugal living, bulking up your savings, and creating multiple streams of income will help secure your financial wellbeing.

The post How To Prepare For A Recession: 10 Must-Do Steps appeared first on Clever Girl Finance.

Are you considering starting a side hustle? Perhaps you imagine quitting your job one day to take your business full-time, or maybe you just need to make a little extra money in your spare time. When launching a successful side hustle, there are several foundational things you should have in place.

But before we dive into how to start a side hustle, let’s talk about what a side hustle is and the benefits you can gain from having one!

What exactly is a side hustle and how can it benefit you?

A side hustle is an additional job or income stream generated alongside a primary job. Side hustles are beneficial because they allow people to make more money while utilizing and practicing other money making skills and also working according to their own schedules.

With a successful side hustle, there is no limit to how much you can make. And with some extra money in your pocket, you can save, utilize the best way to get out of debt or take that trip you wanted.

As exciting as starting a side hustle may seem, you must have a solid plan to fully reap the benefits. In addition, you have to start with the hustle idea that is best for you.

10 Actionable steps for starting a side hustle

Finding the perfect side hustle that helps you make a little extra cash is only half the battle. You must also find out what business will work well for you and your lifestyle.

And then, of course, there’s how to start a side hustle and the rules and laws to follow. Here are all the details for how to begin your side gig.

1. Determine how much time you have

A crucial part of getting started with a side hustle is to think about how much time you have to spare. Are you free most evenings, or are you already super busy and you struggle to find a few hours a week to yourself?

For instance, if I have a couple of hours a day that I could work on my side hustle, I can pick something that requires more time from me on a consistent basis. But if I don’t have much extra time, I might create something that is mostly passive income after it’s set up.

Look at your calendar

In order to find out how much time you have and consequently what side hustle to choose, use a planner or calendar. Add the tasks that you do each day and the specific times that you do them.

You likely already do something like this, so it should be easy to take a look at your schedule.

You may find surprising results. For example, perhaps you have several hours free in the afternoons on Monday and Wednesday. Or maybe your schedule is busier than you realized, and you can only devote time on Saturday mornings to your side hustle.

Find out (realistically) what times you have available and how much time you can spare. Remember that your side gig should not interfere with your regular job, time with family and friends, or other responsibilities. Then, create your side hustle time management plan.

After you know how many hours and what times you are available, then you’ll know what to choose, whether it needs to be mostly passive income or if you can spend a few hours a week working.

2. Pick something that interests you

Think about what interests you. Since your full-time job probably takes most of your energy, finding a side gig that you’ll be excited about long-term is essential. Choose something that is easy for you or that you enjoy.

For example, if you love freelance marketing, you might have a career as a social media marketer. Find something that focuses on what you’re good at.

Let your hobbies guide you

If you aren’t sure where to begin, look to your hobbies for ideas. Maybe you love to write, bake cakes, garden, or organize and clean. See if any of the things that you enjoy doing could be part of a niche business idea that makes you an income.

If it helps, write down as many hobbies or interests as you can think of. Then highlight the hobbies that make money or that have income potential, and go from there.

3. Decide the amount of money you want to earn

It’s easy to say that you want to make extra money each month, but how much is a little extra? Consider some examples of financial goals and the amount of money you need to achieve them.

For example, how much additional income will you need to pay off debt? Perhaps you want to buy a new car; what is the cost involved? Knowing how much money you want to bring in can help you determine which side hustle to start with.

Some side hustles like taking online surveys or dog walking will bring in a couple of hundred dollars a month.

However, suppose you’re looking to replace your current salary or surpass it. In that case, you’ll want to start with a side hustle you can eventually transition into full-time.

How to know what amount you need to make

First, ask yourself why you decided to launch a side hustle gig in the first place. Is it for a one-time payment for something? Is it an ongoing need to make more money?

If it’s a one-time payment, determine exactly how much you need.

On the other hand, if you need an ongoing income, decide precisely the amount you need to be getting paid monthly.

After that, choosing a side hustle will be easier because you’ll know what will make the amount of income you need and what won’t. You’ll also be able to determine if a side hustle will be short or long-term, which may affect what you choose.

4. Create a solid business plan for your side hustle

If you’re in the process of starting a side hustle and do not have a business plan, you need to create one now. A business plan is essentially your roadmap for your side hustle to achieve your goals for a small business. You can’t have success in life without a plan!

Your business plan doesn’t need to be 100 pages long. Instead, it needs to focus on key things to help you build a successful business and show how you’ll start a profitable side hustle.

Your initial business plan should be fluid and will possibly change—a lot! These changes are expected because as you put your ideas on paper and your business comes to life, you may realize other factors.

As a result, you’ll better determine what you want and don’t want in your business or come up with entirely new ideas.

Below are some topics we recommend including and some questions to get you thinking as you create your business plan.

Create an executive summary

Your executive summary outlines your business and the problem you are solving with the product or service you’re offering. The executive summary section, usually a one-pager, will be easier to complete once you’ve built out the main sections of your business plan highlighted below.

Identify your target audience and avatar

When starting a side hustle, you need to know who you’ll sell to. Here, you’ll define your target audience, which includes identifying key demographics such as location, age, and income of your ideal clientele. You’ll also want to consider why your target audience would be interested in your business.

You should also know your ideal client and how you will find these clients. Since social media is a big part of everyone’s lives, LinkedIn, Facebook groups, and Instagram can be helpful in how to get clients online.

Decide on what products and services you’ll offer

Every business offers a product, such as jewelry or a pre-owned designer handbag, or a service like editing or photography. When deciding which side hustle business you should offer, think back to your executive summary. Whatever you offer should align with the problem your business will be solving.

Once clear on this, it’s a good idea to sketch out thoughts on how you will price your products or services. You’ll also want to consider how you’ll be selling them.

Figure out your operating model

A clear operating model helps you understand and lay out how you intend to deliver value with your products and services. It will also help determine the type of experience you plan to provide your ideal customer.

Start by asking yourself, are my products packaged in a way that aligns with the experience I want my customers to have? Is my website in line with my brand?

Once your operating model is fine-tuned and running, and you are branding for success, it will allow you to scale your side hustle because you’ll have well-established processes in place on how to run your business.

Research your competition

Ahh, competition. Everyone hates it, but everyone needs it! No business plan is complete without some insight into your competition.

Where is your competition located? What are the strengths and weaknesses of their offering? And how can you differentiate yourself from your competition and improve your offer?

Finding the answers will give you more clarity and help your business succeed.

Calculate start-up costs and financing

We’ll cover this in more detail below, but in short, this is a critical part of your business plan and something you won’t want to overlook when thinking of how to start a side hustle.

Here, you’ll outline your initial start-up costs, registration fees, branding costs, website development costs, etc. Then, consider your potential sources of funding and whether or not you’ll need investors. It can help to consider your financial goals and how the business fits them.

Figure out your cash flow and budget

Also called your working capital, your cash flow is how much you need to keep your side hustle running day-to-day. These costs need to be laid out as part of your operating expenses. They will give you a baseline of how much you’ll need at a minimum each month to keep your business going.

And, of course, you’ll need a plan for staying on track with your cash flow. That’s where your business budget comes into play.

Having a solid business budget and using budgeting best practices is essential to the success of your business. It allows you to manage your business finances properly and stay on top of your expenses.

Outline your revenues and profit forecasting

You can’t turn a profit if you don’t have a solid revenue stream. Your business plan should outline the products and services you plan to sell. Outline exactly how you will communicate those products and services to your potential customers.

It also means fine-tuning your revenue stream as you learn what works best (or doesn’t). Once you have a solid revenue stream, it becomes easier to forecast your business earnings and profitability.

Also, take a look at potential profits. Becoming profitable and finding out how to increase your income is great, but ideally, you want to have a clear understanding of exactly how much profit you are generating on each product or service you offer.

You can then assess how to maximize your profitability by reducing costs or competitively increasing your prices (or doing a combination of both).

5. Determine what type of business entity to set up

Before you start providing services or earning money when starting a side hustle, you must ensure it is set up correctly, legally and tax-wise. To do this, you’ll refer to the structure of your business.

There are different types of business structures to choose from that are recognized by the IRS. They include Sole Proprietorship, Partnership, Limited Liability Company (LLC), or Corporation. Be sure to talk to your accountant about the tax implications of each of these entities.

The different business entities include:

Sole Proprietorship

In a sole-proprietorship business structure, you run the business alone and are personally responsible for all of the related liabilities.

Partnership

As the name implies, in a partnership, you run the business with a partner or multiple partners. So, the business is managed based on the agreement you set up. You and your business partner(s) are responsible for all the related liabilities.

Limited Liability Company (LLC)

A Limited Liability Company gives you limited liability (similar to a corporation), which means you have no personal liability for business debts and claims.

You’ll also have flexibility in your management structure and ownership, similar to a partnership. LLC owners are called members.

Corporation (S or C Corp)

In a corporation, your business is a separate legal entity, and only the entity itself is legally responsible for any liabilities. Owners are called shareholders.

C corporations and S corporations are the two main types of corporations. The main difference is the way each entity is taxed.

6. Leverage free resources when starting your side hustle

Below are two invaluable resources you will need as you begin your small business journey.

These resources go into much detail regarding the business structures mentioned above. They include the pros and cons and what you need to do to establish your business under these structures.

• Your State Government Business /Taxation website
• The U.S. Small Business Administration website

In addition to these, be on the lookout for ways to gather information and learn new skills for your business. You may be able to find free courses, Facebook groups, etc., where you can learn more about the skills you need for your side hustle without paying any money.

7. Decide what you will call your side hustle

The next step in operation is to decide on a business name (if you haven’t already).

FYI—Your business name is a big deal! It will reflect your brand identity and be the world’s first introduction to your new venture. But before you decide on a business name, here are a few things to consider:

• Will your business name appeal to your demographic?
• How unique is it?
• Is the web domain available?
• Is your business name under someone else’s trademark?

Once you’ve answered these questions, you can register your business with your respective state.

8. Consider setting up business credit

Having a credit profile for your side hustle allows you to maintain a credit history for your business. Just remember how to use credit cards wisely! And this business credit profile is separate from your personal credit profile.

With separate credit profiles, none of your personal credit details will be tied to your business credit inquiries, approvals, or financing.

Different business credit also allows a clear separation of assets between the business owner’s personal assets and the assets that are tied to the business itself.

A separate business profile also means protecting yourself from business identity theft. If your business credit is intertwined with your personal credit, you might not be aware of any theft. You can also monitor your business similarly to how you would monitor your personal credit.

You want to ensure the credit bureaus and your business creditors and vendors can confirm your business information when you apply for financing or do business with them. Below are the steps you need to take to set up your business credit properly:

Incorporate your business

Set up a corporation or an LLC (Limited Liability Company) to ensure your company is considered a separate business entity. For businesses that are sole proprietorships and partnerships, the business is the same as the owner.

So to have separate business credit, your business needs to be a corporation or LLC.

Obtain a Federal Employer Identification Number

An EIN, or an Employer Identification Number, is the number you’ll use for tax filings and business registration. You’ll also need to provide this number to vendors you work with.

Your EIN is like your social security number but for your business. It will tie into your business taxes, hiring employees, and other essential and required legalities.

Open a business checking and savings account

You’ll need to open a business checking account and possibly open a business savings account in your registered business name. These accounts are where you’ll make your day-to-day business transactions.

Establish your business credit profile

Getting a business credit card, which you use for business transactions, can help establish business credit. Another way is through buying products and services from vendors and repaying them within a specified period, also known as net payment terms.

These vendors then make reports to the credit bureaus with your on-time payments. The three major credit bureaus for business are Experian, Equifax, and Dun & Bradstreet.

Pay your bills on time

Not just on time but in full where possible to build your business credit score, i.e., your Paydex Score. Paying on time not only helps your finances but it helps you build a good reputation for your business.

9. Create a plan to obtain funding for your side hustle if you need to

When starting a side hustle, one of the biggest roadblocks is being able to fund it. Even if your business idea is excellent, you still need money. I touched on this above, but here I’ll outline the different types of funding you should consider:

Self-funding

Self-funding your business from savings should be your first resort, in my opinion. I think funding your business is beneficial, so you don’t start with debt.

If you have no savings (or not enough) to put toward your business immediately, use free and inexpensive resources to get set up. Start saving a little bit at a time for your business.

Use a free blog platform, create a social media following, and create a small sample set of products instead of a full-blown product line. Also, consider using free online scheduling and planning tools.

Self-funding means you may need to start small and follow a slower growth progression than if you had a ton of money, but it comes with less risk.

Family and friends

The general rule is to keep friends and family separate from your business, but it depends!

Your friends and family can be great resources when it comes to funding. Why? Because you know and trust them, you can work out low or zero-interest payments with them.

But be careful not to ruin relationships. Loaning money to family can be difficult in some cases. Draw up contracts and make sure you are all in agreement with the contract terms.

Angel investors

Angel investors are typically high-net-worth investors who invest in your business. An angel investor is most likely looking for equity ownership in your business.

Although angels can be great investors, they mostly invest in companies vs. side hustles.

Bank loans

There are pros and cons of personal loans, but it may be an option. A business loan is also something to consider. The good news about getting a loan from a bank is that you don’t have to give up a share of your business in exchange for a loan.

However, you’ll need good credit, AND you’ll be taking on debt that you’ll have to pay back with interest over a specified period.

Crowdfunding

Crowdfunding collects money from various people (usually online) to contribute to your product or service creation in exchange for a reward.

The reward might be the first available offering of your product or some extra equity (shares/ownership in your business). Examples of crowdfunding include kickstarter.com and fundable.com.

With crowdfunding, you don’t always have to give up equity. You also won’t have to go into debt to fund your business.

However, it’s important to know that you will be paying the crowdfunding platform fees when you raise money via crowdfunding.

These fees will be based on the total amount that you raise. In addition, there are also significant tax implications.

Plus, you’ll have to put in a lot of work (including marketing) to ensure a successful funding campaign.

10. Make a schedule that works

One of the most vital things that I personally do when starting a side hustle is to create a daily routine schedule. I advise making a schedule that helps you have enough time for a lucrative side hustle and your day job.

With freelance work or an online side hustle, it will probably be easy to work on it whenever you have free time. But something with set hours will require a bit more planning.

Figure out your hours

How many hours a week or day can you devote to your business? Look at your schedule and see if you can take anything off your plate to make more time for starting a side hustle.

If not, you may find that working on it a little each day, even if it’s just for an hour, is most effective.

Stay organized

Stay organized when planning how to start a side hustle, including organized finances, scheduling, and time management. Get a planner or stick to a strict schedule to ensure you have enough time to devote to this new venture.

Remember to keep track of appointments and meetings and regularly check your emails.

Hire some help

At some point, consider bringing someone onto your team to help out. A virtual assistant can be helpful if you have the money for it.

While this won’t be needed for a while, it’s something to be aware of later when you can afford it and your time becomes more limited.

Expert tip: Be aware of your energy levels

As you can see, there is a lot to starting a side hustle, including setting up a business entity and finding funding. All of this is necessary work but it can leave you a bit drained if you aren’t careful. My idea is to remember to make time for self care and free time when possible, so you don’t get burned out from working too much.

11 examples of profitable side hustle ideas

Do you need help brainstorming ideas for starting a side hustle? Here are some great ideas to get you thinking! Also, check out the CGF book by Bola Sokunbi, The Side Hustle Guide!

1. Dog walker or sitter

If you love dogs or even if you’re a first time dog owner, dog walking and pet sitting are the perfect side hustles. Many people need someone responsible to help care for their furry friends. Plus, you can make a lot of money!

Check out sites like Rover to help you get started!

2. Real estate agent

While this requires time, licensing, and learning, becoming a real estate agent can be incredibly lucrative, especially if you live in an expensive neighborhood. Real estate professionals also get to set their hours to an extent.

3. Etsy shop

If you’re creative, consider opening an Etsy store. People love to find unique products like jewelry and blankets on this online marketplace.

If you can create a popular product, making a full-time income may be possible. You also get to make money doing something you love!

4. Blogging

If writing is one of your passions, or you love sharing what you know, a blog could be for you. Blogging works well as a part-time job and could lead to plenty of income in the future.

In addition, blogging is a great platform to earn additional profits through affiliate marketing and selling digital products.

Some bloggers make enough money to live on or even more than that. Find out how to make money with a blog for beginners and try this side hustle out.

5. Freelance writer

Enjoy researching and writing articles? You can become a freelance writer.

Help bloggers and companies to explain their products and services or share information with their readers. Freelance writing is a good side hustle that is profitable and flexible!

6. Graphic design

Love art? Graphic design is a fun and creative idea. What makes it one of the great side hustles is its versatility.

For instance, you can do website design and sell your work on Etsy, or check out Upwork, or Fiverr.

7. Social media manager

If you are really into social media, become a manager or marketer, or start a consultancy company. As a manager, you can help busy entrepreneurs and businesses find the right clients through Facebook ads, Instagram, Twitter, and other digital marketing.

8. Rent out your spare room using Airbnb

Do you have an extra room? Try using Airbnb. Or better yet, if you have a lot more space to rent or money to invest, you can make money from rental properties by buying a house to rent out.

There are a variety of YouTube channels to help you set up an attractive space for potential guests.

9. Freelance editor

A freelance editor can work with several clients at once and edit the work of writers. As a bonus, you can choose what hours you want to work on your side hustle since freelancers rarely have specific work schedules that must be followed.

10. Create a side hustle with Amazon

If you think about all the money you’ve spent on Amazon, it’s about time you start earning with them instead. Amazon offers a variety of ways to make a profit. Some of the side hustle ideas from Amazon include:

• Self-publish and start selling eBooks on Amazon Kindle Direct Publishing
• Deliver with Amazon through Amazon Flex
• Amazon Handmade, which is pretty much the same as Etsy

11. Start a food delivery business

Bringing food and groceries to people who don’t want to eat out is a simple and profitable side hustle business. You can work under numerous companies, such as DoorDash, or Uber Eats, or even Lyft and other delivery services.

You can choose your schedule and work when you want. Plus, starting a food delivery service is a great way to get familiar with restaurants in your area.

Can I start a side hustle with no money?

Yes, it is possible to start a side hustle with no money! There are several ideas for side hustles, including dog walking and food delivery, that don’t require any upfront costs. In fact, you may already have everything you need to get started and all you need to do is learn how to start a business with no money.

Start by brainstorming side hustle ideas, leverage free resources (e.g  YouTube to learn skills, Canva to design graphics, Mailchimp  to build an email list etc) and start saving to put some cash aside. Having savings is necessary because eventually, you might need to put some cash into your side hustle.

How do you start a side hustle with no experience?

To start a side hustle with no experience, choose something that allows you to begin without specific knowledge about the work.

For example, cleaning houses or offices, pet or house sitting, or taking surveys are all good ideas if you don’t have experience with the gig economy. Even if you’re thinking, “I have no skills!” these are all things that don’t require special training, or they are easy to learn about quickly.

How do you start a side hustle from scratch?

You can start a side hustle from scratch by choosing something that doesn’t require a lot of equipment or money to get started. There are plenty of options in the gig economy, such as driving Uber, delivering groceries or food, or even things that take more time, like writing eBooks.

Find something that either takes time but not money or something you can start quickly without a lot of effort. Discover more ideas by reading our article on how how to start a business from scratch.

Articles related to starting a side hustle

If you enjoyed reading about how to start your own side hustle, check out these articles next!

• 25 Side Hustles For Women That Make Real Money
• 14 Easy Side Hustles From Home To Try Today!
• 12 Of The Best Side Hustle Books To Check Out!
• Starting A Side Business: How I Made $70K In One Year

Starting a successful side hustle is possible!

Now you have all the specifics to set up your side hustle the right way, and you know what some of the best side hustles are. Remember to start with the logistical side first. Create a business plan. Make sure you have proper funding and set up your business entity.

Once you’ve established all that, you can choose a name for your side hustle and decide whether to offer a product or service.

As you can see, there are many unique side hustles to choose from.

However, if none of the above suggestions caught your attention, other resources, such as side hustle books or online courses, can give you more detailed guidance.

It’s time to follow your dreams and make them a massive success! It is possible to build an incredibly successful side hustle with patience and hard work. It may even become your full-time hustle one day if you decide!

The post How To Start A Side Hustle In 10 Steps appeared first on Clever Girl Finance.

You’ve read all the books and watched all the Youtube videos but you still don’t know where to start. Sometimes, when it comes to your personal finances, it can be hard to apply generic advice. And that’s probably why you’re asking the question: do I need a financial advisor?

Financial advisors are financial professionals that guide clients, using their expertise, on what to do with their money and how to meet their long-term goals. To offer this, many advisors complete specific training and hold professional certifications.

Maybe you’re in a bit of a financial fix or have bad money habits. Or perhaps things have been going really well, and you want your money to work a little harder for you.

Either way, this article will take a deep dive into what it takes to work with financial advisors. You’ll learn about the different types of advisors, what they do, and when you might need them.

Is it really necessary to have a financial advisor? How to know

Hiring a financial advisor can be costly. So let’s first answer the question, “Do I need a financial advisor?”.

There are some life situations when you should definitely seek professional guidance. These include the following:

You can’t figure out your personal finances on your own

For some people, managing money is more than a chore. You might fall into this category if you’re already asking the question do I need a financial advisor? And that’s OK.

We all have activities where we shine and others not so much. Some people love cooking, doing dishes, or creating art. Others love managing money. 

If you don’t fall into this last bucket, you’re one of many, and hiring a financial advisor is probably a wise move.

When you’re just starting out on your personal finance journey

If you’re new to understanding how to set intentions for your finances, it can be overwhelming. You can learn about the stock market, bonds, budgeting, retirement planning, and saving. The list is endless. So, financial advisors do help un-muddy the waters for you.

When should you get a financial advisor? It is often a good idea to seek professional financial advice as a beginner. Remember, though, that it can cost you hundreds of dollars and more.

With access to information online, it is advisable to do your own financial research first. If you’re still stumped, then you can take the leap and hire an expert.

You have complex financial considerations

If your finances aren’t straightforward, when should you get a financial advisor? Perhaps you’re dealing with major life changes, such as finding out how to prepare for divorce or bereavement.

In cases like these, outside counsel can help you navigate money worries and major life events. These can include complex family matters, multiple financial accounts, or managing cash flow from multiple sources of income.

At any time in your life, whether you’re in your 30s, 40s, or beyond, you may have a major life change, and your finances could look different. It could be anything from a large pay raise to a new baby to sudden monthly expenses.

A financial advisor can coach you on what steps to take next, regardless of what is happening with your circumstances.

When you receive a lump sum of money (such as an inheritance)

If you’ve acquired a large amount of money and you aren’t sure what steps to take, a financial advisor can be helpful. They can guide you on savings and investment decisions and help you decide on some goals for the money.

That way, you can be sure that your finances are being handled correctly, the way that you want, and make a plan so you don’t spend the money without thinking.

When don’t you need a financial advisor?

All money priorities and circumstances are unique. There are instances where you may not need a financial advisor:

You’ve automated your finances

Have you decided to automate your finances so you’re hitting your savings and investment goals? It sounds like you’re already in good shape.

Many people in this bucket have set up a simple investment plan. It will automatically rebalance with little to no need for making adjustments. Here’s an example of a financial plan to ensure you are on track.

You’re looking for tax help

Tax help should not be confused with financial advisory help. While they both deal with your money, the professionals involved are completely different.

A Certified Public Accountant (CPA) is best equipped to support all your tax needs. A CPA who is also passionate about financial planning will be able to touch on your bigger financial picture while homing in on your taxes.

So if you need to make a tax plan, these professionals will be more helpful.

Expert tip

A financial advisor should help guide you in the right direction with your money. Working with one can be a good idea in some cases.

But be sure that you are making the best financial decisions for you at all times, not just following advice. Take time to think things through and make smart choices, whether you work with a financial advisor or not.

Types of financial advisors

So, do you need a financial advisor? To help you decide, let’s look at the different types of advisors for your money.

Robo advisors

A robo-advisor is also known as a digital money advisor. They provide advice based on complex algorithms linked to your personal profile.

A robo-advisor can make automatic investments for clients, and this is great if you have a simple portfolio. But be aware there’s zero human supervision in the process.

Robo-advisors work best for passive investing. And the great news is you only need a small opening balance to get started. It makes robo-advisors highly accessible to everyone.

For a more hands-on approach, hiring a human financial advisor is in your best interests. This person will become your go-to financial resource.

As you might expect, though, the hands-on approach comes at an expense.

Financial planner (CFP)

A financial planner will help you reach your money goals and also works with you on your current finances.

A CFP stands for Certified Financial Planner (Certified by the CFP board), which is what you should look for if you decide to go this route. This person must pass an exam and complete coursework related to financial planning, and they are also a fiduciary, meaning they put the client’s best interest and financial needs first.

Wealth manager

A wealth manager can advise you about your money, and they typically work with wealthy people with high net worth. They focus on investing, estate planning, and other aspects of wealth.

If you have a large amount of money or are trying to grow your wealth, consider this option.

Registered representative

A registered representative may also be a financial advisor, and they are able to purchase and sell securities for the clients they represent. You can rest assured that they have the knowledge to help you, as they are required to pass extensive tests.

Registered investment advisor

A registered investment advisor can offer you guidance about your money. It can be either a person or a company, and they offer help with your investing options.

A registered investment advisor is also held to specific fiduciary standards, which may give you some peace of mind. This is not a requirement for some other types of advisors.

What type of advisory services do financial advisors offer?

A financial advisor serves many purposes. But their primary goal is to help you plan for your future.

They offer guidance on how to save money, what financial accounts you should open, or how to build an investment portfolio if you want to know how to start investing properly. They also advise on how to think through risk, buy a home, and plan your estate (find out more with this estate planning checklist).

How much does a financial advisor cost?

Your financial advisor will use a fee model. The options are usually a flat fee, an hourly rate, or a percentage-based fee.

However, the fee you pay will also depend on whether your advisor operates in-person or online. As you might expect, in-person financial advisors tend to be more expensive.

In-person financial advisors’ fees

When working with an in-person financial advisor, you’ll come across different payment options. Here are some common ones.

Flat fee

Some advisors charge a flat fee. It can range anywhere from $1,500-$3,000 to make your financial plan, to a much higher amount.

With this, you will get a personalized financial plan built to suit your and your family’s needs. It can be useful because having a plan can help you take action.

Percentage-based fee or fee-only

Some charge a percentage-based fee, which is a percentage of the amount you have invested.

An example would be a percentage of your assets under management. The percentage is typically about 1%.

Hourly fee

Lastly, in-person advisors may offer an hourly rate that can range anywhere from $200 – $400 per hour. But, with this type of package, you won’t receive any follow-up or support. You’ll be on your own to put the plan into action.

So, this works best when you are comfortable with handling your own finances. And you must have the discipline to follow through.

Online financial advisors’ fees

Online financial planning offers a lower fee structure. Fees are based on the assets under management, i.e. a percentage-based fee structure, and can range from 0.20% to 0.35%.

There is typically no requirement for large amounts of money to open such an account.

Online financial advisors include platforms like Betterment and also Wealthfront. These give you access to a personal financial plan and ongoing investment guidance.

What to look for in a financial advisor: 5 Question to ask

If you are ready to seek out a financial advisor, here are some key considerations to keep in mind.

1. What is their fee type?

Hiring a financial advisor can cost you hundreds, if not thousands, of dollars. So, it’s crucial to do a ton of research before you commit to a specific advisor. You’ll want to understand exactly how the fees will work for your financial situation.

Fees may differ by state and level of service. The key to remember is that the simpler your investment needs are, the less you’ll have to pay.

If you are just starting out and need basic investment management, then paying $1,000 for an advisor is a lot.

However, if you’re further along with more complex needs, that amount might make sense.

2. Do they have the right certifications and credentials?

Credentials matter. When you sign on with a new advisor, you’re trusting that person to help you build a secure financial future.

A financial advisor needs to have the right certifications and title, for instance, being a registered investment advisor. You should also look for someone who is a fiduciary.

So, the question, in this case, is not so much do I need a financial advisor, but rather do I need this financial advisor?! The right advisor will have successfully fulfilled the requirements of the Financial Industry Regulatory Authority (FINRA).

If you’re looking for a financial planner, you’ll want to work with someone who has a Certified Financial Planner (CFP) title. This will mean that the individual has successfully fulfilled the CFP Board’s requirements – education, exam, experience, and ethics – to receive this designation.

3. Do you work well with them?

When dealing with any advisor in life, a relationship built on trust matters. But when it comes to personal finance, this matters even more as this could impact your entire future.

As you search for a financial advisor, have as many live conversations with them as possible. Do your research and ensure you trust and can depend on the person fully.

Look for reviews, and if you can, ask for referrals. The more aligned you are in mission, values, and strategy with your advisor, the more rewarding it will be to work with them.

4. How does communication work?

If you’re hiring an in-person financial advisor, be clear on how much access to them you’ll have.

Will they be available to answer your phone calls or respond to your emails quickly? How frequently will you be able to meet face-to-face? Make sure these expectations are set before you sign with them.

5. What’s their investment philosophy?

If you have strong opinions on the impact of your investments, then make sure you choose a financial advisor who aligns with your values and understands your risk tolerance or how risk averse you are.

For example, if you prefer to invest ethically, then ensure your advisor is able to choose investments that will use your dollars positively.

Where can I find a financial advisor?

If you’d prefer to deal with an in-person financial advisor, in most cases it makes sense to choose someone local to you. If you’re looking for a reputable financial advisor in your area, check out the following ways to seek out a professional you can trust.

Via personal referral

Nothing beats the power of a referral, as it provides reassurance. You’ll know that someone you trust has received great value from working with the advisor.

In addition, it gives you first-hand proof that the advisor is reliable and has proven success.

But don’t stop there. A referral is only one piece of the puzzle. You’ll want to make sure the advisor provides 5-star treatment to everyone he/she encounters.

Be sure to do your research, and you can even check online for complaints filed to FINRA (the financial regulatory body).

From online reviews

The internet has opened up ways for us to ensure checks and balances are in place before signing up for services. The biggest way the internet helps is through reviews.

As you look at the profiles of financial advisors, look at their personal reviews as well as the reviews of the organizations they are affiliated with.

If you see any concerning feedback but are still particularly interested in working with the person, be sure to ask them about this when you’re interviewing them. You never want to blindly sign up with a money advisor.

At your local bank or financial institution

Work with your local bank or financial institution if you’re looking for a vetted financial advisor. This option will reassure you that you’re dealing with a reputable institution.

When you work with an advisor from your local bank, you’ll pay standard market rates similar to independent advisors. Another benefit is some advisors offer more than investment advice. They can also help with the importance of life insurance.

Are financial advisors the same as investment advisors?

Financial advisors wear many hats, and they may specialize in different areas. Some may call themselves investment advisors.

But, the main aim of each advisor is to provide financial planning services that help you set and meet your financial goals.

Financial advisors also support clients with guidance on investments and retirement accounts like your IRA. They’ll devise plans to support your specific requirements. For example, college savings, retirement savings, estate planning, inheritance, or business finances.

Your advisor may also educate you on insurance policies and investments. 

Investment advisors, on the other hand, tend to specialize in securities.

Remember, anyone can say that they’re a financial advisor, but you want to look for someone who has the credentials and professional designations to prove they can really help you with your money.

How a financial planner is different from a financial advisor

Both a planner and an advisor can help you with your money. But they aren’t exactly the same.

A financial planner takes an interest in the financial goals you want to accomplish over many years and helps you set up a plan to get there.

On the other hand, an advisor can do this as well, but they may also help you with insurance, investments, etc. They may focus more on the investing aspect of wealth.

The main differences between the two are that a planner focuses on meeting your financial goals. An advisor is someone who can help you with this but also other aspects of your financial health.

Is it okay not to have a financial advisor?

Yes it’s ok not to have a financial advisor – not everyone needs one. If your finances are automated, or you already have a great money plan in place, a financial advisor may be an unnecessary expense.

While having an advisor can be helpful for some, especially those with complicated financial situations, it is by no means the right choice for everyone.

Is it better to have a financial advisor or do it yourself?

If your financial situation is easy to manage through automation and/or budgeting, you may be able to handle your money on your own. Especially if you understand financial literacy basics and investing.

On the other hand, if you have a large sum of money to deal with, or you’re trying to grow your wealth, and it seems complicated, you can benefit from the advice of a professional.

Do you need a financial advisor if you don’t have a lot of money?

It could benefit you to work with a financial advisor even if you don’t have a lot of money. You might have a lot of questions about money or are new to managing your finances and an advisor could help.

Then again, dealing with a smaller amount of money may be easier to manage by yourself. You may be able to handle your finances independently through a budget and basic investing skills.

What types of financial advisors should you avoid?

If your advisor is costing a lot of money that you don’t feel is worth it, or you have concerns that they aren’t putting your best interests first, you should avoid them.

You may also choose not to work with someone if something just feels off.

For example, if you notice any red flags like a lack of communication.

Article related to financial advice

If you liked this post about whether or not to work with a financial advisor, check out these articles next!

• Do You Have To Spend Money To Make Money?
• How To Manage A Large Sum Of Money Or Financial Windfall In 11 Steps
• How To Manage Your Money: 19 Tips To Do It Right
• 7 Financial Literacy Basics We All Need To Know

Do you need a financial advisor? Leverage these tips to decide!

If you feel stuck and aren’t sure which way to go, knowing when should you get a financial advisor may not be a bad idea.

And if you’re just starting out in your financial journey and have been asking the question, “Do I need a financial advisor?” then the chances are that a professional may help to put your mind at ease and help you learn how to be better with money.

But as you gain more education and experience, you’ll gradually feel more confident to own the management of your finances. Remember, if you come across any bumps in the road, you can always return to your financial advisor for the latest advice to help you reach your money goals.

The post Do I Need A Financial Advisor? Here’s How To Decide appeared first on Clever Girl Finance.

Finding creative ways to save money can make all the difference when it comes to your personal finances. Saving money whenever possible is important. It can help build your emergency fund, save for a vacation, or even free up money so you can start investing.

For example, simply saving $10 a week from your paycheck adds up to $520 in a year. There’s bound to be at least one or two things you can put into effect to help improve your finances.

Knowing how to save money from salary or biweekly pay doesn’t have to be hard, and once you get started it can actually get pretty addicting and fun too!

Top 33 creative ways to save money!

Are you ready to start saving your hard-earned money? Get started with these fantastic creative ways to save money!

1. Declutter

One of our favorite creative ways to save money is by decluttering your life. Decluttering is an excellent way to learn how to increase your income.

For instance, go through your closet and your house, and sell the things you don’t need or use. Put the money you earn into savings or use it to pay down debt.

There are plenty of items you probably don’t use and could make money from, like unused appliances, electronics, and more.

2. Detox

Do an inbox detox. Unsubscribe from retailer emails so you don’t get tempted to make impulse purchases every time they announce a sale or discount. Trust me—there will always be another sale!

3. DIY your hair and nails

Cut your salon visits by half by doing your own hair and nails instead. You’ll save a ton of money, and you’ll still look beautiful. This is one of my favorite creative ways to save money.

In addition, you can create a minimalist skincare routine to save time and money on products.

4. Consider cost per wear

For every clothing purchase you make, ask yourself, “How often will I wear this?” Consider your cost per wear. If you aren’t going to wear it enough, it’s probably not worth it.

5. A sewing kit is your friend

One of the best creative ways to save money is to keep your clothing in top shape by investing in a sewing kit. The next time something rips, see if you can repair it before you buy a replacement. In addition, sewing kits are super cheap.

6. Join your local library

Love reading? Join your local library and borrow books for free instead of buying new titles. You’d be surprised how the savings add up.

Be sure to check out apps like Libby, where you can borrow digital and also audiobooks from your local library without having to go in!

7. Get “cancel” happy

If you aren’t using that subscription service, cancel it! From gym memberships to magazine subscriptions to cable, too many people have paid subscriptions sitting around that they barely use. Get rid of unneeded streaming services and other cable alternatives, and then watch the money start to pile up.

8. Overspending? Freeze the plastic

Here’s one of the funniest personal finance tips: Freeze your credit cards! Getting them out of a block of ice is an inconvenience (a highly annoying one) that will slow down bad habits when you need to know how to stop spending money. It’s one of the more extreme creative ways to save money.

9. Plan meals in advance

Challenge yourself to pack lunch every day for a week or a month. Meal planning and cold lunch ideas are healthy and also easy! Put the money you save into savings or toward your debt.

10. Create a grocery list

Create a list before you go grocery shopping based on what you need at home! A list will help you avoid impulse spending, especially at the grocery store.

One of my favorite apps to save money is Ibotta. I use it to see what offers I can get cashback on at my local grocery store.

They send you the money via a Paypal deposit or gift card once your account hits $20. Always a nice perk!

And if you prefer the old school way, you can still find coupons for everything from bottled water to pasta and other pantry staples.

11. Always compare rates

One of the best personal finance tips for different types of insurance? Shop around yearly and compare your insurance rates to see if you can get a better deal on your current coverage needs.

12. Keep the change

Gather up any loose change in your house and car, and then make a deposit in your savings account or a payment if you’re in over your head with debt. A creative savings method like this might earn you anywhere from $10 to $50 or more, depending on how much change you find. Do this multiple times a year to maximize savings.

13. Go lean at the movies; take a big bag

Looking for personal finance tips that reduce the cost of outings with kids? Skip the overpriced concession/snack stand at the movies. Pack your own snacks in your big handbag for a creative way to save money.

14. Start a spending journal

Wonder where your money is going? A creative way to save money is to start a spending journal and track your spending for 30 days. You’ll start to see where it’s going, and then you can make changes.

15. Organize your bill due dates

Stressed with different bill due dates? Call your providers and then ask to move your bill due dates so they are all around the same time. Your payments will be the same, but paying off your bills for the month all at once can ease anxiety and help you see what money you still have to work with.

16. New month, new budget

Create a new budget for each new month as one of the creative ways to save money. No two months are quite the same, so adjust your budget accordingly.

Not a fan of budgeting? You probably need to try out a few different methods to find better budgeting that works for you.

17. Pay more than the minimum on debt

Pay way more than the minimum toward your debts whenever possible to accelerate your debt payoff. Try the debt snowball worksheet to really win with debt.

Find out more about your credit cards, how student loans work, mortgages, etc. – be sure your extra payments are going toward your principal balance, and you know how much you owe.

18. Know your interest rates, prioritize your debt

Are you aware of the interest rates on any debt you have? You need to be to determine your payoff priority.

In addition, having a payoff priority will help you create an effective plan to get rid of your debt quickly with a debt reduction strategy.

19. Get an emergency fund in place

Having an emergency fund in place makes you less likely to leverage debt to deal with an unplanned situation. Another of my favorite personal finance tips is to start with $1,000.

Once you’re able to get rid of your high-interest debt, increase it to 3 and then 6 months of your basic living expenses.

20. Negotiate everything

Got a job offer on the table? Negotiate more than just your salary—think vacation days, bonuses, work hours, etc.

The most beneficial and creative way to save money is to know your worth and get the benefits and also the pay you deserve! Understand how to ask for a raise and know what the typical pay is for your profession.

Negotiating some bills and expenses is also possible, so take a look at what you’re currently paying and see if you can find any deals.

21. Save for retirement

Probably one of the best personal finance tips out there is to start your retirement savings as soon as you are able. If your employer offers a match, take it—it’s free money. Having a long-term plan for retirement savings will also ensure you actually live out the life you dream of having in retirement.

22. Don’t wait to invest

When discussing investing, you don’t have to be a millionaire to begin. Start small with what you have and leverage platforms like Acorns, and also Stash, and a fav of mine, Stockpile. You’ll be surprised how quickly things add up.

23. Get the right insurance

You need the right type and adequate amount of insurance in place: auto, health, disability, life, home, renter’s, pet, etc. Not having insurance or having inadequate insurance can mess up your financial plans in the event that something unplanned happens.

Insurance helps you to be prepared, so be sure you understand the importance of life insurance and why it’s essential to have insurance for your car and home.

24. Become accountable

Accountability helps you stay on top of your goals. Find an accountability partner to keep you focused as you build wealth, and also find creative savings methods. You are more likely to succeed when you put your goals out there.

25. Create a money-savings chart

Money savings charts are another way to hold yourself accountable, and this method helps you with tracking savings. There are lots of charts you can print and then use for specific savings goals.

Whether you are trying to save your first $1,000 or want to have Christmas on a budget, these charts will help you attain your goal more easily.

26. Try a money-savings challenge

One of the most fun and creative ways to save money is participating in a money saving challenge! A money-savings challenge is when you save a certain amount of money depending on what the rules are.

For example, the 52 week money challenge has you save a specific amount every week for 52 weeks. When the challenge is over, you save $1378! Pick a challenge that excites you and that you can incorporate into your monthly budget.

27. Automate your savings

It’s much too easy to forget to transfer over your weekly savings deposits. That’s why knowing how to automate your finances will ensure you are consistently saving money every week.

You can set up a specific amount or even a percentage of your paycheck. Set up automatic transfers to bulk up your savings fast.

28. Find free things to do

We all need to have fun, but going out can get costly. However, you wouldn’t believe how many cheap and free things there are to do. Simply google free things to do and the name of your town and find free events and activities on a budget.

Who knows? You might find concerts, free museum days, and more. Find fun things to do for free with friends and family.

29. Set a daily routine for your finances

One of the best creative ways to save money is to set a daily routine schedule for your finances. Creating good money habits by daily checking in on your finances keeps you accountable and also focused on your financial goals.

30. Remember – gratitude always

Be grateful for what you have. Gratitude makes you content. And contentment curbs unnecessary spending.

When you’re tempted to go on a shopping spree or spend more than you need to, think of a few things you’re thankful for instead, and maybe even try a daily gratitude list.

31. Utility expenses

Your utility bill will cost you some money each month, but you have a lot of control over how much.

For example, consider how to save money on water by doing laundry only when needed, not just for a t-shirt or one pair of socks. And finding out how to lower electric bill expenses is simple. You can begin by turning off lights and being more aware of costs.

32. Unconventional food savings

Even if your grocery bill is as low as possible, you could save more by gardening, canning food, and eating leftovers. 

Instead of putting items in your fridge and them turning into food waste, make sure you make meals that use all the ingredients you have. Learn to care for a garden and grow some vegetables. You may also can food and store it.

33. Shop thrifty

One of the best creative ways to save money? Consider shifting your spending habits so you can become more thrifty. Start shopping second-hand for items like clothing and furniture, and check out thrift stores instead of department stores.

Shopping thrifty doesn’t have to be difficult, either. When you do have a shopping list, simply check out options that would cost you less for the same thing.

Expert tip: Start with one savings idea

Don’t become overwhelmed with the options for saving. Instead, just pick one and go for it. Build up your confidence by adding one money saving idea to your life, and then another, and so on.

You’ll be encouraged when you see how much money you get to keep instead of spend.

How can I consistently save money creatively?

Save consistently by keeping things interesting. Try different creative ideas each month or week, and challenge yourself to save. It will seem more fun that way, and you’ll want to continue.

Something you should always consider is the purpose of budgets. Be sure to have one for your finances, even as you look for other ways to save.

Is it easy to find creative savings?

Yes, there are probably saving opportunities all around you. From spending less on electricity to decluttering, you can find ways to hold onto more of your cash. And you don’t have to overthink it too much, simply pick a way to save and get started!

Does saving creatively help me save large amounts of money?

Yes! It may seem that these savings are only small amounts, but with time and consistency, they can add up! A savings of $5 or $10 here and there can lead to more savings, and you can learn how to grow your money, too, if you invest!

Related posts to creative savings

• 18 Money-Saving Challenges To Save More Money!
• How To Do A 6-Month Savings Challenge!
• 21 Realistic Ways For How To Save Money Fast!
• Try A Money Saving Game! 15 Grown-Up Savings Games To Try!

Get creative and save more money starting today!

Cutting expenses and finding creative savings ideas to save up money is one of the best ways to get out of debt and bulk up your bank account. Try one or two tips to get started and then build from there. Once you see how much you save, you’ll be motivated to do more!

Interested in getting out of debt, saving money, and also becoming financially successful? Enroll in our free financial courses and worksheets to start your journey to financial success!

The post 33 Creative Ways To Save Money Right Now! appeared first on Clever Girl Finance.

Let’s talk about saving money for your child via custodial accounts and education plans. Different types of custodial accounts for minors can help you save for your child’s future. Here’s how they work!

Parent-owned custodial accounts for minors are a great way to pass on generational wealth to your children or grandchildren.

In addition to being useful for education, custodial accounts have multiple purposes, from college to wealth building. A child’s parent or a grandparent is most likely the person who will set up a custodial account.

College is obviously a large expense, and custodial accounts and 529b plans may be the answer. Parents are making saving a priority.

The Saving For College survey found that 40% of parents had saved up over $30,000 for their kid’s college. However, only 7% of parents feel that they have enough money saved up for college costs.

What is a custodial account?

A custodial account is fairly easy to figure out. It’s simply an investment account that an adult controls for minors who are under the age of majority, which is 18 (in some states, 21).

In my custodial accounts, I can invest funds in the stock market for the financial goals I have set. Saving for my children’s college student education is one of them.

There are a few very important factors to keep in mind with custodial accounts for minors. They include the following:

Your child might need to pay taxes on any income the account makes

Income from interest, dividends, or capital gains, may need to be included in your tax returns or your child’s tax returns. (It’s best to clarify this with a qualified tax accountant.)

There are tax rules around monetary gifts you give your child

The rules are complicated surrounding gift taxes. You may be able to give away a certain amount of money a year as a gift, such as 18,000, without paying taxes.

However, there are many rules that apply, and asking an accountant is the best course of action.

The money does not have to be used for college

A big advantage of the custodial brokerage account is that the beneficiary can use this money for anything. It’s not directly tied to your child’s education.

It also means that it isn’t limited to just tuition and fees like college savings plans. But do keep in mind that this could also impact financial aid eligibility for your child.

Types of custodial accounts for minors

There are a few types of custodial accounts that you can choose from. Choose the one that works best for you and makes the most sense for your financial situation.

Uniform Gift to Minors Act

With a UGMA, the custodian can make investment choices and put the money in bonds, stocks, mutual funds, ETFs, and other investing options. It can be very beneficial if you’re saving up for large future expenses.

Withdrawals need to be for the minor the account is for

A great feature about these is you have the ability to make a withdrawal of money from this account, as long as it benefits the minor the account is for. Which may come in handy to pay for education before college or other expenses for your child.

No formal trust is required

A main advantage of UGMA accounts is that you don’t need to set up a formal trust. You can use the money you deposit in this account to invest in your child’s future, and they are simple to set up.

Not tax-deferred

An important thing to note is that this type of account isn’t tax-sheltered, which may affect your decision.

Uniform Transfers to Minors Act

UTMA accounts are quite similar to the UGMA. The one major difference that you’ll notice is what makes up the account. 

Property can be part of the account

The UTMA can include property. You can give real estate, jewelry, and other items to the beneficiary of the account. It’s a good option if you have property or assets like a car or a home and you want to someday transfer ownership to your kid.

Not tax-deferred

As with a UGMA, the UTMA is also not tax-deferred.

Education savings accounts

There are a couple of options for savings accounts, specifically for education. Here’s what you need to know.

529b plan

With a 529b plan, you can set aside funds for your child’s future college student budget expenses, i.e., tuition, books, and other educational costs. These funds can only be used at accredited 2 or 4-year colleges, vocational and technical schools, or at eligible foreign colleges.

Unlike custodial accounts, there are contribution limits with the 529 plans. Contribution limits are typically between $300,000 and $500,000 depending on the state.

529b’s are typically set up by the state, but you can open a 529b in a state different from your primary residence. Some states offer special tax deductions if you open a 529b in the state where you live.

That said, you want to make sure you are aware of all restrictions on the account, including where your child can attend college. You also want to be aware of the fees and costs you will be paying compared to the tax deduction you will get. Here are some of the benefits of a 529b account to help you answer the question, “Is a 529 plan worth it?”

Money grows tax-deferred

The main benefit of having a 529b in place for your child is the tax benefit. Once you begin making contributions, your earnings can grow tax-deferred. Those distributions will not be taxed by the federal government if you use the money for qualified education expenses (which is the purpose of the 529b).  

Withdrawals can be made at anytime

You may take money out of a 529b at any time for any reason. However, if you don’t use the money towards your child’s college education costs, then you will have to pay income taxes and also a 10% federal tax penalty.

The money is invested

Since the 529b is a state-sponsored program, your money is typically invested on your behalf by established brokerage firms. You can open your 529b account in various funds and pick what plan works best with your objectives for your child’s college savings.

One of the most popular approaches for how to start investing for college is selecting funds based on the age of your child.

One approach starts out investing more aggressively, but as your child approaches college age, the mix of investments gets more conservative, i.e., more money in cash and bonds vs. funds.

Alternatively, you can create your own investment mix from the brokerage firm’s available portfolios in their 529b plans.

Remember, with a 529b plan, the money still belongs to you, whereas with a custodial account, the funds belong to the child.

My story with 529b plans

As a mom to twins, one of my financial goals is to support my kids when they go to college. To achieve that goal, I have put a couple of things in place to support this plan.

They include splitting up the college savings for each of my children between custodial brokerage accounts and 529b plans.

For example, I chose the New Hampshire 529b plan, although I live in New Jersey. At the time of writing this, my state does not offer any sort of tax deduction or incentive around the 529b.

However, under the New Hampshire plan, my kids can go to college anywhere in the country.

About 33% of families are saving for college using 529 plans or other college savings plans. They are great educational resources. A state or state agency sponsors these plans and provides tax-advantaged savings.

Almost every state has at least one plan, and you can even opt into an out-of-state one if you’d like.

Coverdell Education Savings Account (ESA)

A Coverdell ESA can help you pay for educational expenses for your child, including more than just college.

Covers elementary through high school

You can also pay for other educational costs from elementary through high school using this type of account. 

It may come in handy to fund an account like this, especially if you plan on sending your child to expensive private schools or if you think their education costs will be high even before college.

Tax-free distributions

Distributions to a Coverdell Education Savings Account are tax-free as long as they do not surpass the beneficiary’s qualified education expenses. The distributions can be used for expenses like tuition and fees, as well as for a computer, books, and other school supplies.

Similar to a 529b you can open an ESA with a brokerage firm and your contributions are invested. You can find more contribution information on the IRS website.

Expert tip

There isn’t one perfect solution for saving for your child’s future. Consider options for education e.g. scholarships and grants, as well as other ways to save e.g. looking at 2-year vs. 4-year colleges.

Communicate with your family and your kids about these financial decisions so they know what to expect and how to prepare for this money when the time comes.

Best custodial accounts for minors

If you don’t know where to begin looking for the right accounts, here are some of the best custodial accounts for minors from reputable companies.

• Fidelity
• Vanguard
• Merrill Edge

The above options all offer a simple process to transfer ownership of the account to your child. There are also lots of investment options including ETFs and mutual funds. And very importantly, you can manage the accounts from your mobile device.

Other options to save for your child’s future

There are a couple of other options if you want to go another route with saving.

Custodial 529 plan

A custodial 529 plan is a combination of a 529 plan and a custodial account. But the child is both the beneficiary and the account holder. It can help you save for college and other big expenses for your kid’s future.

Prepaid tuition plan

Prepaid tuition works similarly to a credit system. You essentially prepay future tuition and fees at today’s costs.

The stipulations set by the plan you have (e.g., covers tuition for only a specific university) limit your funds. These are becoming less common.

Joint savings accounts

A joint savings account is a great opportunity to start saving up money and also teach your children about how finances work. Your kid can have a supervised bank account, so you are aware of all spending.

You may also open a checking account for your child, depending on what you want to use the money for.

It’s a simpler option if you want to start teaching your kids about money and you’d like to begin saving for their future, but you aren’t ready to commit to a custodian or 529b account yet.

Roth IRA for Kids

Want to help your kid prepare for retirement early? Everyone knows that the more time an investment has to grow, the more money you can potentially make. 

Roth IRAs give you the opportunity to save for your child’s retirement tax-free. While it may seem like retirement is a bit too far in the future, this can be an excellent way to help your child build wealth over time.

What is better 529 or a custodial account?

A 529 is a great option for education. But the other hand, a custodial account for minors helps with education, as well as other purposes.

Your kid may use the money for various things, such as purchasing a home. Or they can avoid finding out how to start a business with no money by using the savings from their custodial account.

So there is more flexibility with a custodial account, but if you’re sure that college is in your child’s future, a 529 also works. If you’re still unsure, consider consulting a financial advisor.

Are custodial accounts a good idea?

A custodial account may be a smart way to pass on generational wealth and help your child with college and educational expenses.

However, to determine if it’s the right choice for you, you need to look at your own financial situation.

First, are your finances in a good place for you to start investing for your child’s future? Do you have emergency savings and retirement savings? If so, and you have the means to add money to an account for your child, custodial accounts for minors can be a good idea.

However, also remember that the money will be your child’s once it is added to the account. You will no longer be able to use the money for anything, so be sure that you can afford this first.

Can parents take money from custodial accounts?

Any money transferred into a custodial account now belongs to your child, and you are essentially the custodial manager.

Meaning legally, you can only use the funds in this account for expenditures that benefit your child, not yourself. You cannot withdraw this money and use it for whatever you want.

Should you open a custodial account for your child?

It’s a personal choice that has to do with your budget and finances, as well as your child’s plans for the future. You may prefer a custodial account if your kid is undecided about going to college or if you’d like the option to pay for more things than just education.

In addition, custodial accounts are a good idea if you plan on giving your child any sort of property like real estate.

What happens to custodial accounts after 18?

Once your child reaches age 18 or age 21, they are no longer a minor and will gain full control of the account.

The specific age of 18 or 21, when your child is no longer a minor, depends on the state you live in. That said, it’s important to start teaching your children financial responsibility as early as possible.

Topics like how to manage credit card debt and balancing school and work as a college student are key lessons you can teach your child for their financial success!

Related posts to custodial accounts

• The Best Investments For Teens And How To Start
• 7 Best Stocks For Kids
• Budgeting For Kids: How To Get Them Started
• Financial Literacy For Teenagers: Key Money Tips For Teens

Save for your child’s future starting today!

As college expenses continue to rise, it’s important to take steps today with custodial accounts for minors or educational savings accounts to help your child get an education without worrying about the debt burden of how student loans work.

If you are a new mom or preparing for a baby, it’s not too early to start. And if you’re years behind, don’t worry; it’s never too late, either.

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