All Articles Tagged "Personal Finance"
We talk about budgeting on this site all the time: ways to save money, things you might be wasting money on. One sacred thing we don’t talk about: the wine budget. Oh how we love to have a nice glass of wine at the end of the day.
Turns out that habit could be eating — or drinking — away at your bank account.
The Bureau of Labor Statistics finds that we spend on average $445 per year on beer, wine and spirits. And to be honest, that sounds low. If you consider that some portion of people don’t drink, or drink PBRs, box wine or a couple of less expensive half pints per week and that could be driving down the number. Still, even at $445, it’s one percent of household spending.
The latest Gallup poll shows that 64 percent of Americans drink occasionally. Beer is consumed the most. And the average person drinks four alcoholic beverages per week. Nine percent of people drink more than eight alcoholic beverages.
“It is not always the case that we can’t squeeze any more savings out of our budgets,” says Reuters. “It is that we choose not to, because we just don’t want to give up the booze.” The author points to a dietitian who calculated that her wine and gin habit was costing “$180 a month, or over $2,000 a year,” not counting drinks out with friends.
She stopped drinking all together (for a variety of reasons) and found that she saved a lot of money. Perhaps, if some of us thought about it, we could cut back some and save some cash.
But I once had a conversation with a friend about a similar indulgence: coffee. I’m one of those people who enjoys a large cup every morning. (Media people love their coffee.) This friend, also a member of the media, argued that the spend on coffee was a minor indulgence that helps us steer clear of larger ones. Spending $3 on coffee in the morning is a deterrent against spending, say, $12 at lunch to make up for the “deprivation.” We suggest often that people make coffee at home to save money. If you do that, or take some other belt-tightening measure, aren’t you entitled to do something special for yourself elsewhere?
For many, that’s what that glass of wine, pint of beer, or mixed cocktail is. Certainly, you shouldn’t go overboard; if you indulge all the time, it becomes a lifestyle. But a $15 bottle of wine like our dietitian friend describes doesn’t seem like the worst thing, does it? What do we work for if not to enjoy the fruits of our labor both big and small?
What’s your take?
We think we know, but sometimes we have no clue when it comes to personal finances. Sure you are doing things to get by, but is it really enough? You don’t have to work on Wall Street to understand money and how to use it. Common sense is a powerful thing. Here are some of the money lies we tell ourselves. Are you guilty?
There is no greater joy you will ever experience in life quite like having a child. It’s amazing — and yet pricey given the average cost of raising a child these days is over $245,000. It’s funny how much we spend in life without realizing we had that much to spend in the first place. Parents know too well that our little bundles of joy can set us back some serious dollars. Should you be new to the parenting club, here are some tips on ways you can reduce child care costs.
From the Cradle
Over the course of a lifetime, we forge an array of relationships through a combination of choice, circumstance, and fate. The primary relationship — the bond between parents and child — is clinically considered to be one of the most important and influential in our lives. This is because we enter it without choice or preparation, and at the most vulnerable and impressionable stages of our human development: infancy and childhood.
As adults, we are cognizant of how our childhood experiences molded our sexual, racial, and spiritual identities. We may even be able to trace the foundation of our political leanings and political outlooks to certain experiences in our youth. But what about our financial selves? How much do we think about the impact of our primary relationships on the development of our financial identities?
Baby See, Baby Do
During infancy, the principal role of parents is to create a world that is safe and predictable for a baby, providing for basic caretaking needs (i.e. feeding, changing, caressing). The role of parents changes, however, as a baby grows. Once children begin to walk and talk, they not only look to parents for care, but they also look to parents for direction. They look to parents for social clues— how to be, how to think, and how to behave, transmitting values to this younger generation through actions and instructions. That includes their parents’ financial identity.
She Gets It From Her Mama
I serve as the quintessential example of this phenomenon. I make a decent living, hold a number of degrees, and live (way) below my means. Nonetheless, I have this fear of being as broke as a joke. Also, I find it difficult to lend money to family members and to accept money from strangers and loved ones. Moreover, I just do not feel right if I do not have multiple streams of income. I shop wholesale and when I can, I buy it used. Finally, I love using my creativity to make money.
My financial identity as both a disciplined, diligent saver and creative income-generator in my adulthood largely come from both the mistakes and genius that my mother exhibited in handling money as I was coming up.
Many members of our family borrowed money from my mother and never repaid her. As a consequence, she often complained about not having money for what she needed.
- Lesson Learned #1: Money is scarce, (since everyone was asking for it and could not repay it), so hold on to it.
- Lesson Learned #2: Giving money to family can make you sad, so try to avoid it.
- Lesson Learned #3: People do not like to repay money, so don’t expect it back.
We spent Sunday afternoons shopping in wholesale districts and outlets.
- Lesson Learned #1: Bargain-hunting is fun and recreational.
- Lesson Learned#2: You can always pay less for an item.
- Lesson Learned #3: Retail stores price gouge and should be avoided.
I was cashier in my mother’s home-based boutique and worked in my uncle’s grocery stores.
- Lesson Learned #1: Have an entrepreneurial spirit.
- Lesson Learned #2: Learn the consumer interests of those around you and cater to them.
- Lesson Learned #3: Pay your bills on time and keep a great history of credit so you can expand your business easily.
Go Back to Your Financial Roots
Understanding your financial identity is the cornerstone to financial recovery and financial self-awareness. Knowing who you are and why you are the way you are is key to self-acceptance and change. The things that we learned as childhood should be reevaluated and modified if they are not working to our benefit. Through conscious planning, reflection, and the help of others, we have the power to restructure, rebuild, and redefine the influence of the past.
There are plenty of reasons why a relationship doesn’t work out. Someone can cheat or otherwise not be the person you thought they were. But one of the biggest reasons why folks separate is because of money. Here are some bad financial habits that can ruin your relationship. Are you guilty of any of these? Always remember: communication is key!
At some point in our lives we experience hardships. Sometimes it comes as a soft blow that’s somewhat bearable — and other times it knocks us so hard we feel too crippled to stand. Regardless of your situation, know there are second and third chances to get things right and turn the page. We can start again. Here are some tips on how to recover from a financial disaster.
When you crunch the numbers, did you know that overdraft fees tend to carry an annual rate of 17,000 percent? That’s crazy! Those of us who swear by our debit cards need to be careful as it’s super easy to get hit with an overdraft fee. Sure the government has stepped in smacking the hands of banking institutions who enjoy adding them on — but that doesn’t mean we are 100 percent in the clear. Check out these tips on ways you can avoid overdraft fees.
A new study from the Urban Institute reveals over 35 percent of Americans have debts reported to collection agencies. This means that one out of three people are relying too much on loans instead paying for things with money they have. Now there is certainly nothing wrong with a credit card, so long as you don’t go crazy. Here are some warning signs that you are overusing them.
You have the money, but you still don’t feel like you deserve what you buy.
If you love to spend money, but hate yourself when you do, you are not crazy. Many of us love to shop, buy gifts or conquer a great sale. But afterwards we feel that gnawing in our stomach. That doubt. That guilt.
We often get questions from readers about this feeling. For instance, Brooke, a participant at one of our events, told us this story:
“I really love my job, finally. After reading a million articles about people who couldn’t believe they get paid to do what they love. I am finally one of them! With too many false starts to count, I found a fit in advertising. Apparently my hair-brained ideas and constant doodling are valuable when focused and refined. The pace is insane and the workload massive, but I finally make great money to do what I love.
So why do I feel horrible when I buy things? Almost everything I buy makes me feel guilty later. Whether it’s an iPad I need for work or a skirt on sale — I feel guilty. Initially, I love looking at the options, trying stuff on, deciding which one is best, making the purchase and then, like heartburn from a bad burrito, I feel it. A fiery knot of self-judgment and doubt forms in my stomach. I start thinking, “Why did I buy this? Was it really a great deal? My credit card balance is killing me. I could live without this. Can I take it back?”
I feel trapped in an exhausting cycle. And it takes all joy out of my success and ability to purchase things I like and need. How do I stop feeling like this?”
Constantly plagued with the guilt of buyer’s remorse even while living within your budget? Visit Your Tango where The Money Couple gives some helpful tips on learning your money style and having a healthy relationship with personal finances.
When you decide to pull-up your big girl panties and take charge of your finances like a grown woman, you may begin to realize that everyone will not be happy with your new frugal lifestyle.
Your shopaholic friends will become your new financial frenemies and say things to keep you chained to the door of revolving credit, conspicuous consumption, and living beyond your means.
Here are five things that financial frenemies love to say to keep your financial situation in critical condition:
You only live once (YOLO): It’s true; you only live once. But here is something else to remember: each of your credit card bills, mortgage payments, and car notes has their own life cycle OAM (once a month.)
“But it is on sale…” If you are desperately trying to adhere to a budget, a financial frenemy will gladly try to throw you off your course to debt-free living by saying, “but it’s on sale” to justify something that is not scheduled in your budget. What your financial frenemy fails to understand is that buying unnecessary items whether for a little or a lot is wasted money if it is not a need.
“You work hard, you deserve it.” This statement really kills me. When your financial frenemy starts whispering this yiddy-yadda, ask them to be more specific about what “it” really means. Because when it comes to spending money that you do not have on things that you already own, “it” really means the following: less money, more debt, more crap, and more clutter. I doubt that that is something that you work hard for or deserve.
“It’s an investment…” Your financial frenemy really has a warped understanding of the definition of “investment” when she views spending your tax refund or rent on clothes, hair, electronics, or a car—all items that lose value over time.
Quick reminder, as one of my financial-friends-in-my-head Michelle Singletary loves to say, “If it is on your ass, than it is not an asset.”
“But that’s what credit cards are for…” Your financial frenemy will say this when she is trying to convince you to buy something that is WAY out of your financial comfort zone. I mean, way out. Here’s the thing: credit card money IS NOT yours. If you could not afford to buy an item without the credit card, how do you expect to repay that amount of money PLUS the interest that is slapped on for borrowing someone else’s money?
Discerning between you financial frenemy and financial friend is a cornerstone to developing a healthy financial backbone. But be strong and of good courage when you come across the forked tongue of your financial frenemy. Your wallet and your financial future depend on it.
Kara is a life coach, motivational speaker, author, and founder of The Frugal Feminista. She is also the author of the ebook The 5-Day Financial Reset Plan. You can download it for free here. Connect with Kara @frugalfeminista.