Is There a ‘Right’ Amount of Emergency Funds to Have Saved? 

Do one thing: If you don’t have a separate emergency fund set up outside of your main checking account, open one and set up an electronic funds transfer to move a specific amount – say $20 to start – from the main account every pay period. 

Despite what you may think, emergency funds are for everyone, not just high earners. So often, we build them up with the best of intentions. Or we think about starting one, but can’t seem to take the leap and open a separate account and move money there on a regular basis. 

Thing is, life can be so much less stressful if you have some cash tucked away just in case something happens. So when that something happens—and it will—you’ll be ready and won’t have to reach for a high-interest credit card to cover the cost of a massive repair bill or an emergency room visit.

If you don’t have a cash cushion just yet, don’t panic. But don’t procrastinate, either. As a group, millions of Americans are deep in debt these days and many have little left after paying monthly bills. Research from the Consumer Financial Protection Bureau (CFPB) found that nearly one-fourth (24%) of U.S. adults surveyed had no savings set back for an emergency, and 39% had less than a month of income held in reserve. 

You can absolutely pay down your debt and save for the future at the same time. The key is baby steps. While sending money to credit cards and other obligations, you can still tuck away a small amount every pay period. Every little bit helps.

How Much Emergency Savings Do You Really Need?

“While there’s no hard and fast rule about how much emergency savings someone needs,” notes Kathryn Kubiak-Rizzone, a certified financial planner in Rochester, NY, there are guidelines. “A good rule of thumb has been to have three to six months of living expenses set aside.”

And when we talk about living expenses, that means the amount you need to cover the basics such as food, shelter, transportation, and utilities. If you lose your job and don’t have other income streams, you’ll need to quickly cut back on those pricey subscriptions, and restaurant dining, until you are back on your feet.

Here’s a breakdown of who typically needs more and who needs less when it comes to emergency funds:

Six to Twelve Months of Savings

The Self-Employed. “People who work for themselves often benefit from having closer to twelve months of expenses in an emergency fund,” Kubiak-Rizzone says. “That way, they don’t have to worry as much about dry spells and they can focus on what’s needed for longer-term growth and sustainability.” 

Multiple Dependents. The number of people who rely on your income is an important consideration when determining how much you need in savings. The more people, the more money needed. “Households with more than one source of income could potentially get away with only having three months of expenses in an emergency fund,” notes certified financial planner Jovan Johnson, adding that “if you depend on one source of income, six to twelve months would be better.” 

“When children are in the picture,” says Johnson, “it is always a good idea to play it safe. Children come with extra costs, unpredictability, and responsibility. So with children, six to twelve months of expenses saved in an emergency fund is ideal.” 

Close to Retirement. Adults who are closing in on retirement may have a hard time finding work if they are unexpectedly let go. That’s why it’s important for them to have access to savings to cover up to a year of lost income. 

Three to Six Months of Savings

Multiple Income Streams. Those with stable jobs who live in households with more than one earner, plus those with an accessible investment portfolio, access to low-interest credit (think home equity line of credit, not just credit cards), and possible family support may be able to get by on a smaller emergency fund, financial experts say. 

Three Months of Savings

The Well Insured. Those with a full portfolio of insurance coverage (short-term and long-term disability) still need to make sure they have adequate cash set aside to cover any periods before coverage starts. “Many long-term disability insurance policies have at least a three-month waiting period before benefits kick in,” says Johnson. “In that case, you want to be sure to have at least three months’ worth of expenses set aside in cash. If you happen to have short-term and long-term disability insurance with minimal gaps in coverage, you might be able to get by with a smaller emergency fund.” 

Less Than Three Months of Savings

Early Career. Those who are new to the workforce and have the ability to find another job quickly if they lose their current one may be able to get by with as little as six weeks of emergency savings. Living with roommates or family members will also help someone stretch a smaller savings pool.  

Article Courtesy of SavvyMoney with reporting by Casandra Andrews

Tips to lower delivery and eating out costs

You probably remember a fun dinner celebrating a birthday or anniversary with friends and family. But what you may not realize is how much dining in and eating out goes unnoticed. The small grab-and-go lunches, fast casual dinners, pizza delivery, and coffee add up over time and the results can be costly. Here are some easy-to-implement steps to reign in these expenses.

Meal Planning. Look at your week to determine the following:

• How many times a week do you eat out or have food delivered? 
• Which meals are you having delivered or eating out? Breakfast? Lunch? Dinner? Late-Night Snacks? 
• Why are you eating out or having food delivered? (i.e. lack of planning, lack of time, convenience) 

Now consider which of these could be replaced by something you make at home. Changing just a few can help your budget.

Buy Frozen Foods. Most frozen food is a lot cheaper than delivery and eating out. With a lot of great options in the freezer section from famous brands and restaurants, you can still eat the foods you love at a fraction of the cost.  

Approach Social Gatherings Differently. Social engagements with friends over delicious food don’t have to break the bank.

• Find off-peak times to eat and socialize, brunch is usually cheaper than dinner.
• Take advantage of happy hour for bargain pricing on food and drinks.
• Split the cost of delivered meals when having people over. 

Stretch Your Meals. When eating out or having food delivered, think about meals for the next few days. Order a little more, or portion out your meal to cover your lunches for the upcoming week. 

Eat Your Leftovers. 40% of the food in the U.S. is wasted each year. To save money, you actually need to eat leftovers, otherwise, you’re just throwing money away.

Brew at Home. A daily coffee habit can be costly. Buy a decent coffee maker and start brewing at home to save money in the long run.

Spot the Deals. If you’re going out or ordering in, you can still be a savvy shopper by looking for promo codes, coupons, or membership services to reduce your costs and help you save money. 

Article Courtesy of SavvyMoney Blog

Living on your own for the first time can be empowering. It means having independence and all the things that come with it. Some of those things—like not having to share a bathroom—are wonderful. Others—like killing spiders yourself—are not so fun. And leading the pack in the not-so-fun category: bills.

Bills tend to sneak up on us because they don’t fit nicely into a routine. They all have different due dates, some are delivered to your mailbox and others to your inbox, some need to be paid monthly and others yearly, and some have amounts that fluctuate. It takes a lot of wrangling to get them all under control.

The importance of “bill time”

Bills may not stick to a routine, but you sure can. No matter how you keep track of your bills, you still need to take the time to manage them. It can be as simple as 15 minutes, once a week. “Bill time” lets you:

• Gather up any bills received that week (especially the ones that like hiding under your junk mail)
• Locate and/or print out any e-bills received that week
• Input the bill totals and their due dates into your calendar (or notebook, or spreadsheet, or budgeting app)
• See what bills need to be paid that day
• Pay those bills (this could be a combination of paying them online and/or writing out checks and addressing envelopes)
• Mark those bills as paid (and revel in your self-satisfaction)
• Look ahead to see what your payment schedule looks like the following week and month

Sticking to the same day and time for “bill time” is important:

• It creates a routine that’s easy to follow
• It saves time by allowing you to tackle several payments at once
• It keeps you organized and aware of your payment schedule
• It’s the best way to eliminate the “out of sight, out of mind” problem that so many of us have with our bills

So, you have your regularly scheduled “bill time” and you have a stack of bills. Now you need a system to keep track of it all. Luckily, there are so many ways to manage your bills that it’s easy to customize a system that works well for you.

DIGITAL

Dedicated personal finance apps: If your smartphone is basically an extension of your body, using an app might be the best way to manage your bills. Although there are several stand-alone bill payment apps to choose from, you might also consider looking into more comprehensive budgeting apps that include bill management as a feature. If the apps are free, download a bunch of them and take a quick tour to see which one you like best. If you have to pay for an app, do some research to understand the extent of its features before you buy it.

These questions may help you in your search:

• Is it a calendar-based, spreadsheet-based, or list-based app?
• Can you pay bills from within the app?
• Does the app use a notification system to remind you of upcoming bills? Can you customize those notifications?
• Is the app secure? (This is especially important if you need to input your personal or banking information.)
• Is the app supported by your financial institution?
• Is the app compatible with other apps you use (e.g., your digital calendar)?

Digital calendars: Personal finance apps can be helpful, but when it comes down to it, a generic calendar app is enough to help you stay on track. If you’re already a calendar app user, consider creating a sub-calendar with your bill payment schedule. Or, if you don’t like the idea of mixing “bill time” with leisure time, you can use a completely separate calendar app to manage your finances.

Digital spreadsheets: Spreadsheets are typically more of a laptop or desktop solution than a smartphone solution (although some software packages let you access your spreadsheets from anywhere). Most top budgeting programs include custom-designed spreadsheets, but there are also tons of free spreadsheet templates available for download that work with your default spreadsheet software—even Pinterest is full of them!

Reminders/alerts: A reliable reminder app can give your bill management system a powerful boost. If your bill payment app is lacking when it comes to notification options, a dedicated reminder app can make up for it. If you prefer organizing your finances on paper, you can still set up digital alerts to make sure you stay on track. And don’t forget to set up a recurring reminder for your weekly “bill time”!

ANALOG

On paper: Using pen and paper to manage your bills might sound completely old school—especially when there are so many digital alternatives available—but some people have much more success creating a payment schedule the analog way. There’s just something about writing things down and physically ticking items off a list that can make the process feel more “real” and tangible than doing the digital equivalent on your phone or laptop. So if you find yourself slipping on your payments no matter how many apps you download, give paper a try.

Paper calendars: If you’re a visual person, a calendar system is a great way to go. Wall calendars and agenda-style calendars work equally well (the dollar store and free printable templates are the cheapest way to get started). Mark down your paydays and your bills in your calendar, and come up with a consistent way to note when bills have been paid (like highlighting them).

Paper spreadsheets: Some people feel more organized if they have their spreadsheets printed out and sorted in a binder or notebook. A quick search on Google or Pinterest will connect you with tons of free, beautifully designed, and printable spreadsheets that you can use to build your bill payment system.

Pro Tip

No matter what system you end up using, this tip can help you avoid getting hit with a late fee. If you’re using a calendar-based system, write down your bills and their due date on the day on which you plan to pay them (not on their actual due date). It helps you stay ahead of the game and buys you a little extra time if you do happen to slip up.

Article Courtesy of It’s A Money Thing

Income and expenses are two of the most fundamental aspects of a budget.

Income

To have a budget, you need income. Income is any money that you receive. The most common type of income is earnings from a job, but other forms of income include interest (such as from a savings account) and investment earnings. Depending on the kind of income, you may earn it at regular intervals (weekly, biweekly, monthly, etc.) or sporadically, such as when you make a sale or earn a commission.

Expenses

Expenses are all the things you spend money on, from the frivolous (an extra treat after a long day) to the required (housing and utility payments).

It may be helpful to think of your expenses as falling into two categories: needs and wants.

Needs are the things you require to live and work in relative comfort. This includes things like…

• Food
• Housing
• Electricity
• Heat/AC
• Transportation Costs
• Clothing

Wants are the things you may not need to survive, but that make your life more enjoyable. This includes expenses related to vacations, hobbies, and entertainment, but also the more expensive or extravagant versions of your needs. You need food, but want to go to fancy or expensive restaurants. Similarly, you need clothes, but you don’t need the newest, trendiest clothes. It’s important to be honest when considering what expense is a need and what is a want, so you can effectively manage your expenses.

Balancing Income and Expenses

For a sustainable budget, your income needs to stay above your expenses. If not, you’ll have to borrow money or dip into savings to make ends meet. After covering your expenses, your extra income will ideally be saved for future goals and an emergency fund. In accounting terms, the balance between your income and expenses is often referred to as your cash flow. If you have a positive cash flow, your income is higher than your expenses. If you have a negative cash flow, your expenses are higher than your income.

While it may not work for everyone, the 50/30/20 rule can be a helpful place to start when considering a healthy budget. With this, your expenses take up 80% of your income, with 50% going toward needs and 30% going toward wants. The remaining 20% goes into savings. If that isn’t an option right now, there are a few changes you can make to bring your income and expenses closer to that goal (or at least closer to something sustainable), as outlined below.

• Decrease your expenses – Cutting your expenses is generally the easiest way to get some control over an out-of-control budget. You’ll need to take a hard look at your spending and consider the areas where you can cut. Fixed expenses like debt or rent payments are much harder to change. But variable expenses, like your food or entertainment bill, are easier. This Coach can help you find areas that you can trim.
• Increase your income – Increasing your income is another way to create a buffer between your income and expenses. One way to do this is to get a part-time or gig-economy-style job such as delivering food, driving for ride-share companies, or working late night shifts. Of course, this requires more of your time. Another option is to look for a new job that pays more and gives you room in your budget. That may require gaining new skills by taking classes or gaining certificates. Unfortunately, those things often cost money. But, if you can make the added expense work in your budget for a short time, it can pay off in the long term.

Managing your income and expenses is a lifelong process. As they change, your budget will need to change as well. It’s important to reevaluate it periodically to ensure that you’ve accommodated for any life changes.

Article Courtesy of Banzai Learning Center

Disclaimer

While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

Neither Banzai nor its sponsoring partners make any warranties or representations as to the accuracy, applicability, completeness, or suitability for any particular purpose of the information contained herein. Banzai and its sponsoring partners expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release Banzai and its sponsoring partners from any such liability. Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.

Ever been playing a game and needed just one more life to finish the level? That life may cost you, but what’s $1.99 this one time? The problem is that that’s exactly how predatory companies want you to feel.

Many apps, games, and websites use deceptive or exploitative tactics to convince you to make purchases. While the costs of these items are usually fairly low, small purchases add up. Being aware of the most common practices these platforms use can help you spot and avoid them before falling into the trap.

Financial Traps

“Sales”

Many sites arbitrarily raise their prices so that they can offer sales with big discounts. This makes it feel like you’re getting a great deal. Who could turn down 40% off? The problem is that you think you’re saving money when you really aren’t and, thus, buy something when you normally wouldn’t.

Tiered Access or Paywalls

Some websites can suck you in by giving access to certain parts of it for free, but many features (often the best ones) aren’t available unless you pay. There may even be tiers. You pay a little for some content, but you’ll need to pay even more if you want the rest or want it without certain annoying features like ads.

Subscriptions

Paying $10 a month doesn’t sound too bad. But if you consider it is $120 a year, that can take a heavier toll on your budget. With multiple subscriptions to different games, apps, and websites, you’re suddenly paying a lot more money than you probably realize. Most companies also require you to opt out of a subscription that automatically renews, so if you aren’t paying attention, you could accidentally get stuck paying for more than you intend.

Careful Prices

It’s no accident that an extra life costs $0.99 instead of $1.00 or that an in-game item costs $8.99 instead of $9.00. When you read the “lower” price, it’s easier to justify buying it.

Psychological Traps

Intermediate Currency

Many games, apps, and websites require you to buy an intermediate currency that you use to buy things on the site. Whether they call it jewels, tickets, coins, or anything else, it’s a common way to hide what you’re actually paying. An item may cost 5,000 jewels, but what does that mean in actual dollars? If you already have the jewels in your inventory, you’re much less likely to check.

Similarly, when you buy the intermediate currency, you’re usually forced to buy them in predetermined bundles. This can lead to buying more than you need. Say, for example, you can get 200 tickets for $2.00 or 500 tickets for $4.50, but you only need 300 tickets. Regardless of how you get there, you’re forced to spend more than you need and may even be tempted to buy extra due to the “good deal.”

Addictive Games

Some games are designed to be extremely addicting. Like gambling, you may become convinced that you just need one more try to win or get the reward. Or maybe you feel good when you succeed. If the game asks you to pay to keep playing, you’re much more likely to do so. Some companies know this and take advantage of it.

Timed Deals

These deals are used to entice you to buy things by giving you a time limit. “Buy one get one half off, but only today,” or “Buy in the next five minutes and get double the points.” When you’re forced to make a snap decision or fear you may lose out on savings, you may buy something that you normally wouldn’t.

Pay-to-Win Scenarios

Similar to paywalls, some games may let you play for free, but to have any real chance at doing well or winning, you’ll need to purchase in-game items or stat boosts. This can be particularly effective when players are pitted against each other in competition.

Of course, some of these practices are more manipulative than others, but you should be aware of all of them when you make a purchase online or in an app. Ask yourself if any of these practices are being used to convince you. If so, it may be worthwhile to take a step back and reevaluate whether a purchase is actually worth your hard-earned money.

Article Courtesy of Banzai Learning Center

Disclaimer

While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

Neither Banzai nor its sponsoring partners make any warranties or representations as to the accuracy, applicability, completeness, or suitability for any particular purpose of the information contained herein. Banzai and its sponsoring partners expressly disclaim any liability arising from the use or misuse of these materials and, by visiting this site, you agree to release Banzai and its sponsoring partners from any such liability. Do not rely upon the information provided in this content when making decisions regarding financial or legal matters without first consulting with a qualified, licensed professional.