Establish and Manage Your Budget

Spending PlanWith regards to personal finance and your fiscal health, establishing a budget is a good place to start.

Before moving forward, I should note that I have recently started using the term ‘spending plan’ vice budget and I sometimes use them interchangeably as they refer to the same action.

However, for many, ‘budget’ has many negative connotations, representing constraints and speaks to what you will not, or cannot, do.

Conversely, a spending plan, is viewed more favorably, in a more positive light, as it speaks to what your values and goals are; and how money should flow in and out of the home.

A spending plan is an effective tool for controlling debt and serves as a financial guide. It lets you know if you are heading in the right direction and are on track to reach financial goals such as buying a home, sending a child to college, or preparing for retirement. In addition to being an effective financial guide, a spending plan allows you to measure your progress on a regular basis and implement changes as necessary.

How to Overcome a Budgeting Failure [Single Moms Income]

The first step in establishing a spending plan is to track your expenses over a given time period; three to four months at a minimum. Doing so will reveal two critical pieces of information: your total expenses relative to your income and your current income allocation. With that information in hand, you are ready to gain control of your financial life.

The RWR Spending Planner – part of the RWR Simple Retirement Workbook – is available as a free download. Ideally, your income will exceed your expenses. If not, you should consider ways to generate more income and/or determine how you can reduce expenses. Once you have achieved a positive monthly status, you can look more closely at your current allocation.


Are you allocating enough money to areas such as savings or retirement accounts, and other vehicles that will help you reach your financial goals? If not, your spending plan will help identify the areas (e.g. entertainment, clothing, transportation) where you might be able to reduce expenses, making a shift to more desirable areas.

Integration of Strengths [TramueL]

As you might imagine, managing your spending plan is not a once and done proposition; it is a very dynamic process that will change over time as your income changes, your debt is reduced, and numerous other factors. Therefore, you must be prepared to monitor your spending plan, and adjust as necessary, on a regular basis, continually looking for ways to reduce expenses and ensure that you are on track to reach your financial goals.

What tool(s) do you use to manage your spending plan?

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Maximize Your Business Storage Space with Pallet Racking

Business storage space is always at a premium. If you have plenty of spare storage space in your warehouse or storage yard, then it is fair to say that you are probably paying too much for your premises and can afford to downsize. For any business to be running without excessive costs its storage space ought to be maximized. If you are a business owner seeking for ways to optimise your storage space, you can consider racking systems like pallet racking, which are known to enhance the storage capacity by allowing inventory or goods to be stored on pallets.

Storage Solutions

Source: Unilever, China

Utilize Vertical Space with Pallet Racking

The costs associated with business premises – whether owned or rented – are most usually measured in terms of the footprint. The number of square meters that is being paid for will vary from business to business, so the vertical space should be maximized before paying for more floor space is considered. Because it is all too easy to respond to the need for more storage by using more floor space, warehouses can soon become unkempt.

In order to make use of the vertical space, pallet racking can be availed from companies such as Warehouse Storage Solutions Ltd, as it not only provides a cost-effective use of the available height, but also helps to rationalize items in a storage system making it easier for staff to navigate and find the things they need.

External Pallet Racking

Many people think that pallet racking is only good for items stowed away in storage rooms or warehouses. However, they are equally good for the external storage of items so long as they can be kept outdoors in the first place. Metalwork and building materials, for example, are often kept in a storage yard, but can be organized in a much more efficiently with external pallet racking. Good external pallet racking should be galvanized to protect it from the elements and provide years of continued usage. Conventional external pallet racking systems are mounted into a concrete base which means that they can cope with heavier loads and the bulkiest of items without the risk of toppling over.

Picking and Stock Keeping

Correctly picking components from a bill of materials is one of the things that slick manufacturers do well. With fully maximized storage space that utilizes pallet racking, achieving the efficiency of first-time picking becomes so much easier. This is especially the case when smaller stock items and pre-assembled components are kept in handy foldable pallet cases which keep everything neatly together on a rack. These cases also come in handy when stock checking and mean that much more accurate counts are taken which can lead to further efficiencies by avoiding unnecessary purchasing, for example.

Whether an individual or a business, it pays to be frugal and seek out solutions that will save you money.

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Build Your Fiscal Foundation

Portfolio ValueAs with physical, mental, and spiritual fitness, achieving fiscal fitness pays tremendous dividends. The essential elements of a sound fiscal foundation? Maintain a spending plan, minimize debt, establish an emergency fund, and contribute to retirement plans.

Maintaining a spending plan means itemizing current expenses. Doing so allows you to carefully track how much money you are taking in during a given period and figure out the best way to divide it among various categories. Moreover, a spending plan provides an opportunity to see where changes can be made with regards to expenses. A reduction in expenses means an opportunity to increase savings and investment contributions.

The second element is to minimize and manage debt. While some debt (e.g. college and car loans) is impossible to avoid for most, it can be minimized by limiting the number of outstanding loans as much as possible and by seeking the lowest interest rates possible when a loan is required.

The most significant ways to manage debt are to pay off loans as quickly as possible, limiting the amount paid in interest and to avoid carrying balances on credit cards. The interest paid on credit cards is an inhibitor to maintaining fiscal fitness and building wealth. Establishing an emergency fund, the third element, is the key to avoiding carrying credit card balances and dipping into monies intended for savings and investments.

An emergency fund is a cash account that is used only to fill critical financial gaps or meet unexpected expenses. With regard to the question of how much should be maintained in an emergency fund, there are various schools of thought.  Some suggest living expenses for a given period (e.g. one year), while others suggest income for a given period (e.g. three or six months). In most cases, marital status (theoretically single people should have more as they are reliant on a single income); the number of children in the household, and the level of job security are the primary factors for consideration. Ultimately, the amount will vary for everyone as the factors that impact lives will be different. However, three months living expenses should be considered the minimum.

Fiscal FoundationThe final element is to contribute to retirement plans. Most people will not have the benefit of a defined benefit plan; instead, they will be reliant on a defined contribution plan and an individual retirement savings plan to secure their financial future.

With defined contribution plans, the employee and/or the employer contribute money to the employee’s account. The traditional 401(k) is the most popular type of defined contribution plan. In 2015 the contribution limit will increase from $17,500 to $18,000. Those individuals 50 (or turning 50 at any point during the year) or over will be allowed to add an additional $6,000 in “catch-up contributions” in the new year.

There are two major types of individual retirement savings plans, the traditional Individual Retirement Account (IRA) and the Roth IRA. In 2015, the limit for both will remain at $5,500. As with 401(k) plans, catch-up contributions ($1,000) are allowed for those 50 or older. Both types of IRAs provide tax breaks; it really comes down to when you get to claim them. Traditional IRA contributions are tax-deductible on both state and federal tax returns for the year you make the contribution, while withdrawals in retirement are taxed at ordinary income tax rates. On the other hand, Roth IRAs provide no tax break during the period contributions are made; however, the earnings and withdrawals are generally tax-free based on free tax calculators found online. Simply put, with traditional IRAs, you avoid taxes when you put the money in while with Roth IRAs, you avoid taxes when you take it out in retirement.

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Let’s Talk About Checks, Baby

Money TalksIn the past, I have lamented on the pages of this blog that there isn’t enough conversation about personal finance and retirement planning. It seems as though a lot of people are afraid to discuss money matters. I say let’s talk about checks, baby, let’s talk about you and me, let’s talk about all the good things and the bad things that may be, let’s talk about checks … and savings accounts, emergency funds, 401(k)s, IRAs, etc.

I suspect that part of the reluctance stems from the fact that in our society the norm is to not discuss money, whether that be salaries or savings. Perhaps the more significant reasons are that people are afraid their ignorance with respect to money matters will be revealed if they say too much and they will be unfavorably compared to others if they reveal their salary, savings, portfolio balances, etc.

Unfortunately, too many people spend too much time worried about how they stack up against the Joneses instead of understanding the value of picking the brains of financially savvy friends or family members; and sharing useful information. While it is somewhat understandable that people would not want to reveal too much about their personal finances – after all, we are talking about personal finance – to others outside of their family, why don’t families in general, and spouses specifically, talk more about finances? Why is that spouses don’t talk in detail about money matters or actively pull in two different directions with respect to managing their money and planning for retirement?

While I have thought about the topic for a while, it was brought to the forefront for me recently after having conversations with a couple of new acquaintances that are disappointed that they and their spouse don’t really discuss retirement planning in any meaningful way or they appear to be pulling in two different directions.

Anyone that has been involved in a relationship for any length of time knows that there will be tension over money/money issues at some point. Below are five actions you and your significant other should take to limit potential arguments about money, mitigate the damage from any arguments and ensure you meet your financial goals, particularly with respect to retirement:

Discuss Your Dreams – Don’t assume you know what your significant other wants to do when you’re retired or that they know what it is that you want to do in retirement. How important is travel to one or both of you? To what extent do you plan to help out children and grandchildren? Identify the things you should do together as well as those that you will likely engage in independently. Take the time to talk about what it is you want to do … and just as importantly, listen to what it is your significant other would like to do.

Track Your Expenses – Monitor and record your income and expenses over a given time period; three to four months at a minimum. Doing so will reveal two critical pieces of information: your total expenses relative to your income and your current income allocation. With that information in hand, you are ready to gain control of your financial life. The RWR Spending Planner – part of the RWR Simple Retirement Workbook – is available as a free download. Ideally, your income will exceed your expenses. If not, you should consider ways to generate more income and/or determine how you can reduce expenses. Once you have achieved a positive monthly status, you can look more closely at your current allocation.

Set Common Goals – With a firm understanding of your individual and shared dreams; and an understanding of how your present income is being spent, saved and invested, discuss what your monetary goals should be to attain your dreams. The RWR Retirement Planner – part of the RWR Simple Retirement Workbook – helps users understand and track the relevant factors (i.e. current principal, years to retirement, expected rate of return on investments and the requisite annual contributions) that will determine their annual retirement income. The planner is available as a free download.

Practice Honesty – Too often, significant others don’t share when they make discretionary purchases. I believe it is reasonable to suspect that people don’t share as often as they should because they fear a fight. Unfortunately, too often couples fall into the habit of hiding purchases. One way to make it easier to allow for better communication and honesty is to factor autonomy into your relationship. With your goals defined and your spending plan set, determine how much money each partner can maintain on their own, perhaps in separate accounts, and spend at their discretion. As an example, my wife and I maintain separate checking accounts and we have established that either can spend up to $200/month at their own discretion.

Review Your Retirement Plan Quarterly – Dedicate some time every three months or so to review your retirement plan, making sure you are on track, and review the first four actions. Perhaps there are some modifications to your dreams/desires. Maybe your household has taken on new expenses – or shed some expenses – recently. Perhaps one or both of you have received significant raises at work and you’re giving some consideration to adjusting your retirement goals … the quarterly review is a good time to discuss and adjust where appropriate.

Don’t underestimate the value of openly discussing your money/retirement dreams, goals, hopes and fears. Pour two glasses of wine tonight and settle in for an honest conversation. There is no better time than the present to get started. Stay savvy, my friends. Stay savvy!

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Today’s Taxes for Tomorrow’s Retirement

A Savvy Contributor: Jenna is a freelance blogger who is mainly focused on business innovation and breaking stories in business. She has been blogging since college where she studied marketing and has merged her love of keying stories into copy writing work as well as plenty of reading and writing for fun! Find and follow her on Twitter!

Taxes and RetirementApril showers are starting to fall, and tax season is drawing to a close. Have you decided what to do with your tax refund? Savvy planners understand that it is time to take that money and have it start working for you.

There are many choices of where to put your money to get the best returns, the biggest tax breaks, and those all important savings for this year and future years.

Save with Tax Filling and Refunds

When filing your taxes, you have the choice to deposit the money into multiple accounts. IRS form 8888 can be filled out to direct your refund to as many as three different accounts. Simply placing some of the money into a savings account, as opposed to all into your checking account, can help keep you from spending it too rapidly. Better choices include depositing funds into an IRA or Roth IRA, opening a MyRA, and purchasing savings bonds. This would use your money to prepare you for retirement. The earlier you start saving, the better. Money invested and saved during your younger years can add up to a nice, large nest egg for your retirement. Unleash the power of accrued interest in your favor!

IRA, Roth IRA, MyRA, and Saving Bonds

An IRA, Individual Retirement Account, is a pre-tax retirement savings account that once it matures is then eligible for taxation. A Roth IRA is a post-tax retirement account where the taxes have been paid on the money before being put into it. No more than $5500 a year can be placed into a Traditional IRA or Roth IRA. The contribution limit is raised to $6500 for those of age 50 or older. After the year is over you still have until April 15th to put money into an IRA or Roth IRA, as long as you have not exceeded the maximum allowed contribution, for that tax year.

MyRAs are new for the 2015 tax year. Introduced as a way to supplement Social Security benefits, only $25 is needed to open a MyRA, and a continued $5 in payroll deductions. It is also limited like IRA’s and Roth IRA’s to only $5500 per year or $6500 for those 50 and older. Once the account has $15,000, or after thirty years, it has to be rolled into a private IRA. This is an excellent option for households making less than $191,000 a year. It starts the process of saving for retirement while keeping the pay-in at a minimum.

Up to $5,000 of your refund can be used to purchase between one and three paper series I savings bonds. The interest rate for I savings bonds is adjusted annually for inflation. The interest is added monthly and is paid to the holder when the bond is cashed. Savings bonds will continue to accrue interest for up to thirty years. Three months of interest is forfeited if the bond is cashed in after less than five years. Savings bonds can be purchased for as little as $50, increasing in increments of $50.

Planning for the Next Tax Year
A little set aside for the future can make a big difference in your golden years. It’s never too late to improve your savings plan, even for those of us who are getting close to retirement and planning a move to warm and sunny Florida. The kind of services CPA Orlando offers can help you plan for next year’s tax season. The tax laws are always in flux, and a CPA can help determine which IRA works best for you, or if the safe investment in savings bonds makes the most sense to your situation. With the right help, you could spend your retirement relaxing on a beautiful beach in Orlando.

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