Avoiding Financial Urban Legends

by Jessica Sommerfield · 0 comments

Urban Legends are the almost-believable myths that get passed around in our culture, never to be fully proven or explained (think Big Foot). Something in our human nature latches onto these stories and perpetuates them. Maybe it’s our affinity for the sensational, or our eagerness to be fooled by things we know could never be real but like to dream about, nonetheless. Whatever the underlying reasons for our culture’s tendency to create and spread these types of myths, we have to be careful not to be fooled (or made a fool of) by them.

Urban legends remind me of the same myths and stories that get spread around the Internet, especially, about money management. You don’t have to go too far to find links that promise:

Rapid debt elimination, and it won’t cost you a penny
Thousands of dollars a week doing simple tasks from home
Early retirement if you join this ‘business plan’
Investments that rapidly double or triple their value

Not only are these types of advertisements usually too good to be true; they’re designed to lure you into poor financial choices. Honestly, we all know that debt elimination doesn’t happen immediately, menial jobs from home require an unrealistic rate of output to make money, and most overnight-millionaire businesses or investments are either scams or high-risk. If you’re seriously interested in a particular debt-relief method, business idea, or investment opportunity, check it out on Consumer Reports and with the Better Business Bureau for legitimacy; you can’t even believe all the Internet-based reviews because companies either write many themselves or pay people to.

In addition to these types of get-rich-quick or eliminate-your-money-problems-quick schemes, the online world is also full of plenty of products and services which promise more than they can deliver. Beware of wasting your money on:

Miracle creams
‘Natural’ rapid weight loss pills
Obscure nutritional supplements
Almost anything that offers a no-risk, money-back guarantee

On the other hand, not all financial urban legends sound so unbelievable. For instance, there’s the myth that boycotting certain brands of gasoline will help gas prices go down (you’ve probably received a forwarded email to this effect), that writing a check in red ink will stall it from being cashed, and that you actually aren’t required to pay federal income tax. There are myths for just about every financial aspect of our daily lives, and some of them sound pretty convincing. If there’s any question of legitimacy, don’t act on it. It’s that simple. Ask around, and if no one else is aware of it or doing it, don’t embarrass yourself or endanger your finances.

Believing an urban legend such as Big Foot is perfectly harmless if it doesn’t sacrifice your good judgment or your wallet. Believing in lies propagated as financial opportunity or trade secrets can deeply hurt your finances, jeopardize your credit, get you in trouble with the IRS, and more. Beware of any money-management advice that sounds questionable or risky, and by all means, don’t believe everything you read. For more information on the latest financial urban myths (as well as some entertainment), check out snopes.com.

Buying the Right Bicycle for You

by Gina Blitstein · 0 comments

With spring on its way, thoughts may turn to outdoor activities like bicycling. If you’re looking to buy a new bike this season, it’s important to choose one that’s appropriate for your needs. Buying the right bike will help you get the most value, satisfaction and pleasure for your bicycle-buying dollars.

Choosing the right bicycle

Consider these factors to determine the best bike for you:

Cost
Because bikes can range in price from a couple hundred dollars to thousands, you may well wonder what factors affect their price. While many things can influence cost, higher-priced bicycles tend to offer more options for customizing where it will impact comfort and functionality like the seat, handlebars and tires.

Your body size
The pros at a good bicycle shop can point you to the right type and size bike for your body and will make any necessary adjustments. Riding a bike that’s the correct size and that’s adjusted to fit you perfectly will help you avoid injury and ensure a comfortable ride.

Your physical condition
Those in better condition can consider most any style bike. If you’re new to riding or are less physically fit, upright bikes with larger tires are easier to ride.

Why and where do you want to ride?
There are bikes for all types of riding and all types of terrain. Choose one that’s built for the kind of riding you want to do and where you want to go.

According to REI.com, some basic types of bikes to consider and their particular features include:

Road bikes are suited to multiple pavement uses including fitness riding, commuting, long-distance/event rides, touring and racing.
Mountain bikes are best for dirt or rocky trails and gravel roads because they’re designed with shock-absorbing features and better braking systems. Mountain bikes can handle dirt trails and the rocks, roots, bumps and ruts that come with them. They feature lower gears than most road bikes to better handle steeper terrain.
Comfort/Hybrid bikes are recreational and are best suited to pavement or gravel/dirt roads. They emphasize comfort and ease of handling and are ideal for riding around flat neighborhoods, parks and bike paths.
Urban/Commuting bikes are designed for use on city streets. Urban bikes are rugged and sturdy with tough frames and strong wheels. They feature an upright riding position that allows you to better see, and be seen by, motorists.

In what conditions will you ride the bike?
You’ll need to outfit your bike with what it needs to suit your riding conditions. Tires with good tread will help grip wet pavement. If you’ll be riding after dark, get front and rear-facing lights.

Bicycle buying tips

Once you decide upon the most likely types of bike(s) to suit your needs, compare brands and prices online. This will enable you to realistically determine your budget and get a fair price when you go shopping.
Bike prices are lower in the off-season.
Rent several bike styles go on a “test drive” before you commit to a purchase.
Buy from a local shop that’s experienced in recommending, fitting and performing maintenance.
A helmet is not optional equipment. Proper cycling apparel can also keep you safe and more comfortable, ensuring your bicycle investment turns out to be a pleasurable one.

A bicycle represents a significant expense so you’ll want to ensure that you’ve purchased wisely. You don’t want to buy a bike; you want to buy the right bike for you. Clearly, making an informed decision will make all the difference when it comes to your safety and satisfaction with your new bicycle.

What’s your “right” bicycle?

Which Bills Should You Pay First?

by Miranda Marquit · 0 comments

When you are strapped for cash, it’s difficult to determine which bills should be paid first. This is an especially difficult decision if you have recently experienced a big financial setback, such as a job loss or a medical emergency. Once you reach this position, it’s time to think about how you will pay your bills, and what you should do next.

Take Care of Survival First

Your first move should be to take care of your survival. You need food and you need to make sure that your power/heat stays on. You might also need to make sure your insurance is up to date so that you don’t end up with even bigger problems.

However, when taking care of your survival, it’s important to make sure that you are only spending on true needs. When you’re in a financial bind, you can’t let your wants become needs. It’s a good way to run into bigger trouble down the road. Slash your budget as far as you are able in order to make sure you survive.

Pay on Secured Items

Next, you probably need to figure out which debts you need to focus on for payments. Start with secured debt, since non-payment can result in loss of an asset. If you don’t make payments on your house, you could lose it (this might also be considered a survival item). The same is true of making your car payment. If you need your car to get to work, you don’t want it repossessed. Look through your debt obligations and identify those that will result in bigger problems if they aren’t paid.

If you absolutely have to skip something, it should be unsecured debt payments, since it’s harder for these creditors to force payment, and it’s harder for them to seize assets.

Contact Your Creditors

It’s best if you aren’t just skipping bill payments, though. When you run into trouble, you should contact your creditors and let them know. In many cases, you can set up a payment plan that reflects your straitened circumstances. Many creditors are willing to work with you if you are committed to debt repayment. Share your situation, and see if you can work out a plan. This is better than just ignoring bills and skipping payments with no explanation. Your credit is still likely to suffer, but it probably won’t be as big a hit.

Consider Other Alternatives

You should also consider other alternatives. You might be surprised at the alternatives available to you. You might need professional help from a reputable credit counselor. In some cases, you might even need to resort to bankruptcy. This is rarely a desirable option, but it’s one that you might be required to consider if a financial catastrophe such as job loss or medical problems have made your situation untenable.

While most of us don’t like the idea of skipping bill payments, or avoiding our responsibilities, there are times when you just don’t have a choice. Prioritize your bill payments, and think about where you can cut back in your budget (or perhaps make more money) so that you can cover as many of your needs as possible.

Maximizing Your Lunch Break

by Jessica Sommerfield · 0 comments

If you’re like most hourly workers, your company dictates you take an unpaid lunch break every day. While most people use this time to scarf down a mid-day meal, you may still have time to kill after you’ve grabbed a bite to eat. Instead of dozing, listening to music, or playing Angry Birds, why not make better use of the time to get further ahead in other areas of your life? Thirty or sixty minutes may not seem like enough time to do anything more than eat, but you’d be amazed at what you can fit in, and how utilizing this ‘wasted time’ can help the rest of your life run that much smoother. Here are some suggestions of time-crunching ways to make the most out of the mid-day.

Lunchbreak Time Saver #1: Run Errands
Some of us already do this when we have to, but why not make it voluntary? Many errands only take a few minutes to run, and doing them on your lunch break saves you from running in a hundred different directions after work. For instance, you might try going to post office, stopping by the bank, shopping for non-perishable groceries and necessities, or dropping off your dry cleaning. Another advantage of running these business-related errands during your lunch is avoiding long lines later in the day when everyone else gets out of work (I’m sure you’ve experienced the frustration of the line to the bank window at 5:00 on a Friday!).

Lunchbreak Time Saver #2: Work Out
If you have a longer lunch hour and work close to a gym that has a shower, you might consider getting in a noon-time workout session. This is helpful if you get up too early to hit the gym in the morning or use the excuse that you’re too tired by the time you get out of work. If you don’t have time to clean up after your workout and refuse to return to work smelling funky, choose a lower-intensity activity that won’t make you break a (serious) sweat, such as walking on the treadmill or resistance work. Even 20-30 minutes a day can make a huge impact on your personal fitness. What’s more, you’ll be more energetic and alert when you return to work and the rest of the day, allowing you to accomplish more than you would have otherwise.

Lunchbreak Time Saver #3: Finish a Project
Many college students find it useful to utilize their lunch break at work to cram in a study session or finish research for a paper. Time is especially precious for those who’re working while attending school, so making use of even an hour can have a huge impact. This is one of the best activities for your lunch break because you can usually eat your lunch while you work on your project. You don’t have to be a college student to engage in this activity; projects can be anything on your to-d0 list or bucket list that you never seem to find the time for — organizing your recipes, putting photos in an album, or even learning how to speak Russian!

Lunchbreak Time Saver #4: Get in Quality Time
Casualties of work and daily obligations, the people that mean the most to us often get the least of our time. It’s amazing how far a 20-minute phone call or a shared lunch in the park can go towards maintaining those vital relationships. We under-estimate the power of simple gestures and quality versus quantity of time. Think about one person in your life you haven’t spent enough time with lately, and consider giving them a call or text on your next lunch break.

Whatever you choose to do, start making the most of your lunch hours. Five hours every week can go a long way toward accomplishing tasks, freeing up your evenings, getting in shape, and spending more time with others.

6 Characteristics of Olympic Athletes That Provide Financial Inspiration

by Gina Blitstein · 0 comments

Olympic athletes are a breed apart. Their dedication to a goal is nothing short of inspirational. While watching the Winter Games recently, I realized that Olympians display a certain set of characteristics that make for their inspirational personalities. I further realized that those same characteristics could be helpful to those of us aspiring to live more successful financial lives. I’ve identified six characteristics that these athletes utilize in their “quest for the greatness” toward which we could strive to help us become champions over our own money:

Set goals – As George Harrison wisely wrote, “If you don’t know where you’re going, any road will take you there.” As Olympians know, it’s important to set goals so you develop a clear vision of what you want to achieve and can devise a plan to attain it. Financially speaking, it’s better to identify specific goals, like, save for a particular large purchase, reduce debt or cut back on certain expenses, rather than a generalized, “I want to handle money better.”
Devise a training schedule – For athletes, a training schedule is the playbook by which their aspirations become reality. It identifies the individual steps toward fitness, technique and endurance and the actions necessary to attain those goals. Your financial training schedule will identify the steps toward your goal such as, contributing to a savings account regularly, pumping up debt repayment or assessing expenses. The keys to successful training are consistency and perseverance.
Live conscientiously – Athletes don’t take their eyes off the prize, even when it’s difficult and unpleasant. No junk food, sleeping late or partying for them because they’re committed to reaching their goals. Likewise, it will take a lot of discipline on your part to save rather than spend, avoid buying on credit and monitor spending carefully. Impulsiveness is the enemy of a dedicated champion.
Surround yourself with a strong support system – No man is an island, and no athlete can do it alone. Olympians have coaches who are as dedicated to their success as they are themselves. Get as much support as possible to help you reach your financial goals. Bring family and friends on board to help you stay the course and motivate you when you need an extra push. Just like an athlete, they’ll be there to cheer you on and celebrate your success.
Be agile – No one can predict what’s around the next bend, so trust your experience to prepare you for the unexpected. Athletes fall, make mistakes and get injured but they keep on going. Bad luck or unforeseen circumstances may befall you along your financial course, too. When it does, be confident that you can make up some time, pick up some points or recover from a setback, too. The financial savvy you’ll develop along the way will enable you to decide whether to make a gutsy move or to keep with the program in order to come out ahead.
Adopt a winning attitude – Olympians don’t get to the top of their game by being unenthusiastic or easily discouraged. While not everyone wins gold and indeed, not every Olympic athlete gets a medal, the important thing is that they gave their all, and are better off for the experience. You’ll never know how much you can impact your financial life until you try. You are the boss of your financial resources and you can aspire to greatness.

These characteristics shared by Olympic athletes can help you be triumphant over your finances. Even if you don’t get the gold, the winning is in the whole-hearted attempt.

What financial lessons can you learn from olympic athletes?

The Importance of Paying Quarterly Taxes

by Miranda Marquit · 0 comments

One of the most important things you can do if you are self-employed is to pay your quarterly taxes.

When you work for “the man,” your taxes are automatically taken from your paycheck. Your employer, using the information you provide your W-4, withholds tax from your paycheck. Then your employer sends it in to the government on a regular basis. You don’t have to do it yourself.

Things are different, though, when you have self-employed income. You don’t have someone else managing your tax payment to the government. Instead, you are responsible for your taxes entirely. If you want to make sure that you don’t find yourself in trouble come tax time, you need to pay quarterly taxes.

Setting Aside Money for Quarterly Taxes

There is a formula for figuring out how much you should pay each quarter. However, the IRS also provides you with the option to just pay what you paid the year before. This is easiest way to go about paying your taxes — although if you make more money each year, you will owe something extra come tax time. But, as long as you pay 100 percent of what you owed the previous year, you won’t be penalized.

I like to take my total tax liability for the year (including what I owe in state taxes — you don’t want to forget what you owe to your state) and divide it by 12. So, if you owe $6,000 in taxes each year, you will want to set aside $500 a month. It’s the easiest way to go about it. Each month, when your money comes in, put aside your tax amount in a high-yield savings account. Then, each quarter, you can pay the government what you owe.

Find out the policy for state. In my state, for instance, there is no provision for quarterly payments. You can send in money as you like. I usually just set aside the requisite amount as part of my overall tax liability, and let it earn interest all year. Then, when April 15 rolls around, I can pay my total state tax bill. (With the federal taxes, of course, I have been paying quarterly throughout the year.)

Another strategy that can work well is when you have a day job, or if you have a spouse with a day job. Part of our planning is to have extra money withheld from my husband’s paycheck. He is an adjunct professor at a university, and so receives a W-2 each year. We withhold a little extra from each paycheck of his in order to help us cover any increase in income that might be the result of high earnings on my part.

That way, we aren’t stuck with a big tax bill. I have a friend who basically uses his wife’s part-time income to pay taxes. They take a huge withholding, and he doesn’t have to worry about paying quarterly taxes at all since it’s all taken care of through his wife’s paycheck.

No matter how you decide to do it, it’s important that you spread out your payments so that you aren’t caught in a tough financial situation as a result of a big lump sum owed to the government.

Using the Goodbudget App: Month 2

by Jessica Sommerfield · 0 comments

In an effort to keep better track of our budget in the new year, my husband and I decided to utilize an electronic version of what is often referred to as “the envelope system.” Goodbudget, a free application available for Android phones, is just one of many possible budgeting app choices (another way your smartphone can save you money). Using this system is putting us on track to achieve (and already helping us achieve) many of our financial goals, both short and long term.

In my last blog, I shared what I appreciated about the budgeting app known as Goodbudget: the visibility of our money, the ability to easily analyze and tweak our budget envelopes, and the existence of designated money for discretionary spending. Last month was our first full month of experience with the system, and since then we’ve gained a better understanding of it and have been able to make some changes and adjustments to increase the app’s usefulness to us.

Although all the initial benefits of using Goodbudget are still true, there are a few more things I’ve noticed and would like to share.

Paid vs. Unpaid Account Differences
At first, we stuck with the free version of the app, which included a set number of budget envelopes. This seemed to work okay for a few weeks until we realized this wasn’t enough. Lumping together our bills into one envelope for the month was inefficient because we couldn’t easily see which ones we’d paid and which were left. We also had too many expenses that only fell under “miscellaneous needs.” So, at the end of of the month my husband decided it was worth the $5 a month to have unlimited envelopes. The paid version also allows us to link the budget to our checking account so we can verify actual expenditures, not just theoretical ones. We haven’t linked the account yet, but plan to. My only concern with this is an increased security risk.

The Importance of Under-Budgeting
My husband, the budget guru, decided to always leave some money unaccounted for, in spite of the temptation to over-budget. Especially with all of our new envelopes, it would be easy to get carried away and budget down to the last penny. We quickly learned that this was a wise safeguard, particularly since we’re still discovering rare or occasional expenses that could throw everything off if we didn’t have any wiggle room.

The Realization of Planning
Two of our envelopes last month were designated as “fun money” for both of us. At the beginning of the month, we re-loaded those envelopes. Since I’d only spent part of mine from the first two weeks, I had a larger amount to spend after the second bi-weekly paycheck since we’d made those envelopes accumulative. The realization of our planning allowed me to spend my birthday money guilt-free! It reminded me what it feels like to be in control of your money, and the freedom it creates.

We are still on this budgeting journey and have much to learn, but we have already discovered a lot in just over a month. One of the biggest advantages of budgeting in general has been the increase in our feeling of empowerment and control over our current and future finances. Having a plan is ironically one of the best ways to enjoy more spontaneity and freedom with your money.

Money and Children: Teach ’em Young for a Lifetime of Financial Competency

by Gina Blitstein · 0 comments

Financial wisdom doesn’t come naturally. Like all important life lessons, it must be taught contextually and refined over time in order to become fully incorporated into the way we think. If we want to raise children to adopt responsible and realistic ways of thinking about money, it’s best we start early to make it an intrinsic part of their lives.

Teaching children about money, its use and management, will lay a foundation for a healthy lifelong relationship with finances. As one of the realities of life, money management should be right up there with the teaching of fundamental principles like personal hygiene, safety, nutrition and interpersonal relationships.

Make money a topic of family discussion that’s addressed like any pertinent issue such as food, activities and school. Help children begin to put money in perspective by teaching them these basic concepts throughout their formative years:

Define money as a resource. In the same way we teach addition and subtraction, money can be conceptualized as a finite resource: If Timmy has three apples and eats one, how many apples does he have left? The apples could just as well be dollars, which get “consumed” by spending. Another money-as-resource situation could be expressed as: We’re saving to go on a family vacation, so we can’t spend for new bikes until next year.
Explain the difference between needs and wants. The ability to make the distinction will help children understand that no one has everything they want but that they can get more of what they want by earning and saving.
Provide a realistic frame of reference. Children have no idea what it costs to provide for the family on a day-to-day basis and save for both special treats and emergencies. They see what others have and assume the financial playing field is level. Without making them feel under- or over-privileged, provide concrete examples of the value of both what they have – and of what they want: We prefer to spend our food budget eating most meals at home because eating out is more expensive; we can spend the money we save for going to the movies.
Be mindful of your financial terminology. Try to avoid phrases like “can’t afford” and subjective words like “rich” and “poor.” Children should understand the words, but try not to assign them to individuals or possessions, lest they lead to ill-informed judgements about people and money.

Games and activities help children to grasp concepts in an age-appropriate manner, making it easier for them to recognize the information as relevant. Fortunately, there are a plethora of games and activities to help teach these important financial concepts. Here are a few, in a variety of forms:

Playing “store” is an often self-initiated activity for children. You can help make it a more potent learning experience by “pricing” their items and helping them pay and make correct change. If you prefer a more realistic way to teach children about the marketplace, take them with you when you shop. Actively involve them in choosing items, price-comparison and adding up totals.
Old-school board games, like Monopoly, Payday, Life, Easy Money and Park and Shop are some of the ways previous generations were first exposed to counting and sorting money, buying, spending, selling and trading things of value. If you’ve got these games around the house, they can be an enjoyable way to reinforce concepts.
Dollars & Cents Activities
Practical Money Skills for Life
Money Games
Jump$tart’s Reality Check

Learning financial responsibility young will nurture a lifelong confidence and competency with money.

How have you taught children about money and its management?

Could a MyRA Encourage You to Save for Retirement?

by Miranda Marquit · 0 comments

One of the issues that politicians, pundits, and financial professionals are concerned about is the “retirement crisis” that seems to be afflicting the country. A number of people haven’t saved anything for retirement, in spite of the ability to do so with the help of tax-advantaged retirement accounts.

There are many reasons that people don’t save for retirement. Some of those reasons include the following:

They worry that they don’t have enough money to start saving
The are concerned because these accounts are investment accounts, and they are worried about losing principal in a market crash.
They don’t like the fees that sometimes come with retirement plans, particularly 401(k) plans.
They feel overwhelmed by the investing options offered by various plans, and are not sure how to proceed.
They don’t work for “the man” and aren’t sure how to set aside money as someone who is self-employed.

While there are ways to get around these issues with the current system, particularly if you open an IRA, many Americans are still intimidated with the idea of retirement investing. A little education can go a long way, especially for those who are self-employed and trying to save for retirement.

But, if you are interested in getting your feet wet with retirement, one possibility is the MyRA, which was recently introduced by President Barack Obama during his 2014 State of the Union Address.

What is the MyRA?

MyRA stands for “my retirement account.” It is a new tax-advantaged account offered by the government. It can be offered through the workplace, so direct deposit is an option. In fact, any situation in which direct deposit is available, it’s possible to open a MyRA (you might not be able to use this account if you are self-employed with certain types of structures, though). However, your work won’t administer the account.

Instead, the account is meant to be administered by the government. The account can be opened with as little as $25, and it’s possible to contribute as little as $5 of each pay check to the account. There won’t be any fees with the MyRA, and you don’t have to worry about picking investments, since the account is pegged to the Thrift Savings Plan Government Securities Investment Fund. The rules are similar to those of a Roth IRA, in that you contribute with after-tax dollars and your earnings grow tax-free over time. You can also withdraw your contributions at any time without penalty, and the yearly contribution limit mimics the IRA limit.

There are a couple of rules, though. You have to make less than $92,000 to contribute. Also, after your account balance reaches $15,000 or you’ve had the account for 30 years, you have to roll it over into a Roth IRA. On top of that, your principal is safe; the government guarantees it.

For the most part, many savers are better off opening an IRA and getting the potential for better returns. However, for those who are wary of equities, and who want cash-like investments (even with the lower returns), this isn’t a bad choice. For those who meet the requirements, it can be a place to park the “safety” investments like cash and cash-like products while other portions of the retirement portfolio are in accounts like IRAs and 401(k)s. It adds one more tax-advantaged account to help your retirement savings efforts.

And for those who aren’t saving anything at all, this is better than nothing.

What do you think of the MyRA?

3 Tips for Big Household Purchases

by Jessica Sommerfield · 0 comments

Whether you’ve just moved out on your own, bought your first home, or are expecting a new baby, sometimes life requires you to make large purchases. You need furniture, kitchenware, small and large appliances, or perhaps renovation materials for a project. Coming up with money for these large items can be challenging because they don’t fit into your normal budget, and you may be tempted to purchase with credit. Going into debt for large purchases isn’t as unavoidable as we’d like to think. Here are a few ways to plan for large purchases and avoid going into debt at every stage of your life.

How to Approach Large Purchases

Since we know they’re necessary and inevitable, just how should we approach large purchases? With careful and patient planning. This includes:

Eliminating the “need it now” mentality
Anticipating your needs in advance
Saving deliberately and uncompromisingly

Tip #1: Eliminating the Need-It-Now Mentality

There’s no arguing the fact that you need furniture to sit on, dishes to cook with, and a bed to sleep on. What’s debatable is the idea that if you need it, you must get it now. This mentality can lead to financial trouble if you choose to pay with credit instead of cash, compromise your budget, and otherwise spend money you don’t have to spend. If you’re struggling with the compulsion to buy something immediately, just remember the pioneers who traveled west to start a new life. They only took what they could carry in a small wagon, and when they arrived at their destination, had to either build, make, trade for, or go without. In our spoiled Western culture, we tend to think we ‘need’ things we could survive perfectly well without for a short time. It rarely hurts to go without or wait for things; in fact, it increases frugality, creativity, self-discipline, and our appreciation for what we have. In addition, waiting to make a purchase allows you more time to compare prices, brands, and find the best deals.

Tip #2: Anticipating Your Needs in Advance

Large purchases tend to follow large decisions, such as moving to a new home, renovating your current home, or starting a family. Instead of scrambling at the last second to come up with funds for large purchases, anticipate your needs and start planning for them accordingly. Even if you’re not considering any major life changes, the law of nature is that things wears out. If you own a home for more than 15- 20 years, your appliances and household structures are going to wear out. Instead of waiting for the day they breathe their last, anticipate needing to replace these items and start saving. If you’re unsure of the lifespan of your appliances, check with the manufacturer or read reviews on the Internet. If items last longer than anticipated, you have that much more money saved for other purchases.

Tip #3: Saving Deliberately and Uncompromisingly

This is the most important part of planning for large purchases. Stop hoping you’ll have the money when the time comes, and plan to. Start saving what you can, even as little as $20 a paycheck, and you’ll be surprised at how quickly it adds up. I recommend that you save the money in a place that goes unnoticed and that you have limited access to, particularly a separate savings account online or with your bank. If you have very good discipline, you can set it aside in cash, but be sure it’s kept safe, especially as your nest-egg grows.

Fit the savings into your budget by designating money from other areas in which you have ‘wiggle room.’ My husband and I created a specific category in our electronic budgeting app. for large purchases. The plan is to set aside money into this category, and when we have enough saved, choose one of these items to purchase.

Good Things Come to Those Who Wait (and Save)

You’ll appreciate your purchases so much more when you’ve remained financially responsible. Whatever methods work best for your household and finances, the key is to plan for large purchases and patiently save up for them.

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