Some of the basic concepts of personal finance needs to repeat as often as possible. One of them is to live below your means as written by Jonathan Chevreau of Financial Post. Live below your means is considered as an eternal truth of personal finance. “This is the granddaddy Truth of personal finance. Without it, there’s little point talking about the rest. The only way to become financially independent is to be consistent about spending less than you earn, year in and year out, decade in and decade out.” The formula for happiness, attributed to Charles Dickens, is based on living below your means. If translated into today’s world, in David Copperfield the character Micawber would say: “Annual income $50,000, annual expenses $40,000, result happiness. Annual income $50,000, annual expenses $60,000, result misery.”
Take control of your personal finance to be wealthier and happier in life.
On Money, Financial blogger Jason Vitug shows three essential money concepts for millennials to become financially savvy: Define your lifestyle, don’t keep up with the Joneses, and money can indeed buy happiness.
According to USDA Report, the total cost to raise a child for food, housing, childcare and education, and other child-rearing expenses up to age 18 is $245,340. That report does not included the costs associated with pregnancy. Holly Johnson of the Simple Dollar put into details the total cost to have a baby by include the medical costs, the impact of maternity leave, and the ongoing costs of caring for a newborn. While the true cost of having a baby depends on one’s health insurance and place of residence, the new parents can expect to pay up to $6,500 for out-of-pocket expense out of the average cost of $10,000 for delivery and a hospital stay. The cost adds up when the yearly $6,960 premium for health insurance is included along with associated costs. Overall, the bundle of joy also comes with extra financial responsibility.
Millennials, born from 1980 to 2000, are now the largest, most diverse generation in the U.S. population. Here are some top financial mistakes that millennials make, written by Ashley Eneriz for Everything Finance blog. The financial mistakes include taking on a lot of debts, not saving for retirement, not having emergency fund, passing up on health insurance and ruining credit scores.
Do you consider yourself as a middle class? and how do you define middle class anyway? Amy Livingston of Money Crashers delves into this issue of what is middle class in America. Often we hear from politicians talking about middle class without giving an exact definition. Media has various definitions to accommodate their viewers. The median American household income was $53,657 with an average net worth of $85,712, but these figures are not the whole picture. In addition to income and net worth, you have to look into education, occupation, lifestyle and aspiration to define the middle class. So it is not possible to define the middle class with household income only.
Saving money doesn’t require one to sacrifice to the extreme. FrugalTrader from Million Dollar Journey gives some real life examples on how to save more money with less effort. It’s hard to find way to cut costs and to save money as most of us are influenced by friends, neighbors and co-workers. The trick to save money is to focus on the largest expenses such as mortgage, car payment, groceries, etc. By refinancing debts or eating out less often, one can quickly and easily save more money every month.
If you are undecided between term life insurance and whole life insurance, Ben Edwards at Money Smart Life has some advice about this insurance debate. He points out that almost in all cases, term life insurance is your best choice. The reasons are that it costs a lot less than whole life insurance and that you can buy a lot more term life insurance compared to whole life insurance while leaving you with more money to invest. Those are very good recommendations. Don’t confuse between insurance and investment. Term life insurance is pure life insurance. So if you are going to get a life insurance, term life insurance is better than whole life insurance.
Jeff Rose shows how to master your money to to become a financial Jedi Master. He gives out simple tips to join the Jedi rank. To master your finance you must tap into the light side of the Force by thinking honestly about your finances and don’t become another Darth Vader by letting money and power to corrupt you.
Grocery is a part of every household’s living expenses. According to United States Department of Agriculture, the cost of food at home for a family of four is around $1000 per month. Mr. Money Mustache shows how to dramatically cut this $1000 grocery bill by over 60%. First you have to nail down how much you want to spend on food per month. Mr. Money Mustache gives us an example of a family of four spending $365 per month or around $1 per day for a family member. The key part is you have to cook at home for your day-to-day foods. By shopping at places like Costco, instead of Whole Foods, you can get the needed ingredients for all your meals. By mixing the expensive foods with cheaper ones, you can make very good meals that average out to $1 per person. Thus you can greatly reduce your grocery bill.
Mr. Canadian Budget Binder (CBB) has an advice for tentative home buyer: Pick the least expensive house in the most expensive neighborhood. Buying a high-end house will be harder to sell than smaller ones in the neighborhood once you need to move on. Mr. CBB points out that you also pay a premium for the extra space over the life of the mortgage. By buying a house that fits his family, Mr. CBB was able to pay the mortgage in full by five years. He recommends prospective home buyers to pick a smaller house in a good neighborhood.
Should you buy the least expensive house in a good neighborhood?
In most scenario, good neighborhoods determine property values. By buying the least expensive house in a good neighborhood, your house will have more potential to increase the property’s value after you move in. Also, there’s less chance you would overpay for the least expensive house.
Another advantage of buying the least expensive house in a good neighborhood is that you will get a far greater return on upgrades and remodeling than if you would do the same thing to the more expensive house in your neighborhood.
A recent article on Vanguard has five great advises for young investors. Here are the five things you can should do to save for retirement:
- Take advantage of time by invest early as your original investment compounds and grows over time
- Always take advantage of employer matches
- Save $15 day to be a millionaire by reducing some daily expenses
- Pay debts off, starting with the highest interest rates
- Contribute to your Roth IRA since time is on your side
Sometimes owning a home makes perfect sense. However, in certain case, renting is a better decision. Here are three reasons you should consider renting written by Miranda Marquit. Renting is a better move (1) if you value flexibility, (2) if you prefer to have someone else taken care of things and (3) the market conditions make renting cheaper.
What with all the “What do I do now?” questions, here is one real life example. Dave Roberts, 72, a retired teacher and software engineer, is on a mission to hike the United States by foot, by bike, even by kayak. “Hotels and lodges are out of the question; he camps out at night and lugs 25 pounds of equipment.” His plan is to travel part of the America’s hiking Triple Crown: Pacific Coast, Continental Divide Trail, and Appalachian Trail. For anyone that has a major hike on their bucket list, this article by the New York Times could be a great motivator for early retirement.
According to Consumerist, ESPN is the most expensive single channel for most people. With the price so high Disney does not want cable subcribers to know how much ESPN costs per year. Most consumers are not avid sports fan. As cable companies let consumers choose which bundles to add to their services, more consumers are willing to part ways with ESPN and ESPN2 to save $8 per month on their cable bill. If you have a choice, would you ditch ESPN to save $8 per month?
Get Rich Slowly shows us how to get better finances in 30 days. Each day you set aside few minutes to get your finance into shape. Starting the first day by compiling all your 2015 expenses and income. Then make a spending plan and plan to save money. After that, reduce your fixed expenses and organize your financial file. Also, audit your bank, interest rate, investment and energy to squeeze out some extra return. Lastly, update your beneficiary information and your will.