Category: Budget

Why We Have Multiple Bank Accounts and Why You Should Too

Posted on by Meredith Rines, MBA, CFP®

multiple bank accounts

I shared awhile back how we had been using the cash envelope system for quite some time. We have been following Dave Ramsey after we took Financial Peace University before we were married. We loved the simplicity of it and how only spending cash really helped us stick to our budget. We were paying down debt, had built up our emergency fund and were no longer having to stress about any bills that came our way.

The Easier Cash Envelope System, Dave Ramsey

However, I hated. I mean hated having to get cash every few weeks and then having to carry it around with me. Not that we lived in an awful, crime-filled town, but I just didn’t like it. I came up with an easier cash envelope system not too long ago and it has been working beautifully. We switched our cash for debit cards and now have multiple bank accounts to work from.

I would highly recommend anyone wanting to tackle their budget to setup multiple accounts. It really has streamlined the way we run our household and has made everything so much easier.

In your budget you (should) have multiple categories for expense, right? So why not do that with your bank accounts? It makes sense to actually separate out your money just as you do on your budget.

You might be asking yourself….

How do you track multiple bank accounts?

Well, it’s really not that hard and not any different than tracking one. Actually, it makes seeing where your money goes a lot easier. On our budget we have a category for each group of expenses: food, misc. bill paying, emergency fund, tax, etc. Then we have a bank account for each category.

I found that when we had one checking and one savings account it was harder to track our spending. We would have to go back to add up how much we were spending on eating out, how much on gas, how much we were saving, and so on. Now, the charges are separated out.

We track our accounts online. One our banking website there is a master dashboard that we can access each account. So it’s nice to login and see what’s been spent out of each account. So much easier to track then having to dig through our budget and check register each month to add up the totals.

If your accounts are not with the same bank then I recommend using mint.com to track your spending. This free online platform will help track your spending and categorize expenses that are similar. It even has pie charts and graphs to help you visualize how much you’re spending in each category. You can input your debt to track how you are doing on paying off your bills. It’s pretty handy.

Does having multiple accounts hurt my credit?

No. Unless you don’t pay your bills and overdraft your account(s). That will hurt your credit. But if you’re careful with your spending and make sure you never draw out more than you have, then you will be fine.

Does it cost money to open multiple accounts?

If your bank charges you to open multiple checking and/or savings accounts then you need to switch banks. When we opened ours there was one rule – keep a minimum of $100 in your savings account to avoid any penalties. Other than that, we could open as many accounts as we needed. We just know that each savings account has to have a $100 balance at all times. So we deposited $100 and treat that has our new zero balance amount. It’s nice because we also have an extra few hundred dollars that we don’t use or try to tap into.

Here’s the Multiple Bank Accounts Your Family Needs:

multiple bank accounts

Emergency Fund:

Just as it sounds – this savings account is for emergencies only. Not weekend trips out of town or new shoes you saw online, but emergencies. I’ve shared how our emergency fund really helped us when we woke up to a broken fridge one day. If you follow Dave Ramsey, he suggest starting with $1,000 emergency fund. Which is a good number to start with. If your car breaks down then you will have some money to get you going again. If your heater goes out in the middle of winter then you will be able to have the repairman out to fix it and not have to cut into your house payment or grocery money.

J and I like to have enough to cover our deductibles in our emergency fund just in case anything should happen to us. That way if we’ve been in an accident then we will be able to get our insurance going while we figure out what to do.

Once you have most of your debt paid off (everything, but your house) Dave Ramsey suggest bumping your emergency fund up to 3-6 months worth of living expenses. That way if you or your spouse lose their job then you will not have to disrupt your family life while you try to find more work. I’m a firm believer in having 6-12 months of living expenses saved up. Anymore than that then I feel like you’re not having your money work for you. Any extra money should be placed in some sort of interest-bearing account (IRA, money market, retirement plan, etc.) and should be helping you reach your long-term goals.

Tips for building your emergency fund:

Have the money withdrawn automatically from your checking account into your savings account. I recommend having this setup the day your paycheck hits your account so you won’t even miss the money.

If you have a habit of withdrawing money from your emergency fund for non-emergencies then move the account to a separate bank. That way you can’t login to the online portal to transfer money. You have to actually make an effort to do so. There are online bank accounts that give a higher interest rate and when you need to withdraw money it takes a few business days to get to you. Online bank accounts are great if you’re passed the $1,000 emergency fund stage. But when you’re just starting out I would recommend keeping the funds within a car ride of your checking account.
Save at least 15% of each paycheck or more until you reach the $1,000 emergency fund level or your selected amount. Once you have reached the first phase amount then start putting extra money from your paychecks to paying off debt.

Tax Savings

Taxes are apart of life. You can’t really avoid it. This tax savings works for both income taxes that are due in April as well as personal and real property taxes that are due in December. Your state might be a little different on personal and real property taxes, but ours are due by December 31st of each year.

I take our previous year’s amount, add 3% for any increase that might happen then divide by 12 months. So if we pay $1,000 in personal and real property taxes in 2015 then I would add 3% (1000 * 1.03 = 1030) then I would take our new amount of $1,030 divided by 12 (1030 / 12 = 85.83). So each month I put back $85.83 so that by December 31st I will have enough to pay for our county taxes.

For income tax time, the goal is to not owe anything and to not get a refund. That’s the magic formula, but it’s hard to achieve every year. So I like to have a little put back just in case.

I also use this account for our home insurance that’s due in July. I take the amount and divide it by 12 then put that amount into this account to cover that cost, too.

Dave Ramsey envelope system

Family Checking

This account is our hub. All of our income comes into this account. Most of our bills are paid directly out of this account. I have our car payments, internet, utilities, car insurance, and any other bill setup to automatically draft out of this account.

This is where your money starts and then is allocated to other checking and savings accounts for the family to use. I make sure that we keep enough to pay all of our bills and then transfer our miscellaneous spending., food budget, savings, etc. to our individual accounts.

Family Checking Tips:

Setup auto-pay when possible to avoid any late payments and penalties.

Setup auto-transfers into your savings accounts to streamline those transactions.

I recommend spending your money on paper first in your budget then start moving money around in the actual accounts. Any money leftover should be kept in this account until the end of the month. Then the extra money should be allocated to savings or any other fund where it’s needed.
You need to keep enough in this account to cover your monthly expenses.

Make sure your bills are paid first before you allocate to any miscellaneous accounts.

Wife’s Checking Account

This is my account – I can spend my money however I want. I pay for any haircuts, girls’ trips, shopping, etc. from this account.

Once our monthly bills and savings are taken care of I allocate money from our family checking account to my checking account. I even have it titled with my name on our banking dashboard so it’s easy to follow. I get to spend this money however I see fit. I can spend it, I can save it, whatever I want. I don’t have to talk it over with J before I purchase something.

When the baby comes, we plan on using my account to cover any non-grocery item costs or daycare costs. Meaning when he gets older, I will cover his haircuts and so on.

This account should not include any family expenses – utility bills, car payments, etc. You can add extra responsibilities to this account, if it fits your family’s needs. Here are a few examples:

  • Groceries, if you do all of the grocery shopping then you can add that budgeted expense to the wife’s checking. In our family, I do most of the shopping but not all. So we have a separate account for groceries and eating out.
  • Gas for your car. You can add extra funds to cover gas for the month.

Husband’s Checking Account

This one is very similar to the wife’s checking account, but is for J. He can spend this money how he sees fit. As I shared in our easier cash envelope post, J likes to carry his cash with him. So that’s up to him to get. I transfer the amount on payday and then from there it’s on him. I no longer have to worry about it.

Tip for both Wife’s Checking and Husband’s Checking:

Add up any expenses you want to be covered from these accounts. For example, J bowls on a weekly league. So we make sure the amount for each week is going to be covered by his miscellaneous account. That way he is responsible for keeping at least how much he needs for bowling in his account. There is no double dipping in our Family Checking to cover the cost if he didn’t spend wisely.

Grocery Checking Account

This one is simple – it’s our grocery and eating out fund. You can add this amount to your Wife’s Checking account or the Husband’s Checking account, but we found that it didn’t work best for us. I do majority of the grocery shopping for our family, but sometimes J will go for me or will stop to pick up something. So by having a separate checking account then he doesn’t have to cover an expense not in his budget or vice versa.

For awhile I would just let him take my debit card for my checking account, but we found out quickly that it wasn’t going to work. He would spend more than I wanted to and I would be without money for other plans.

Now I transfer our grocery and eating out budget to this account twice a month. We can either spend the money on groceries or spend the money on eating out. Either way it has to last us and provide for our food.

Having a separate grocery checking account just made sense for us. It’s not for everyone and that’s okay.

Optional Accounts:

multiple bank accounts

Slush Fund

Once you have your debt mostly paid off, you have your emergency fund built up to cover 6-12 months of living expenses, and you’re putting money away for retirement then I would recommend a slush fund. This is where you put extra money from each month that your family can spend on whatever you want.

Right now whenever J and I want to take a trip or purchase something big we save for it. It may take us a few weeks or even a few months, but we work as a team to put money aside to get what we want. However, one day we will have a slush fund.

A slush fund could also be call the fun fund. Want to take a weekend trip on a moment’s notice – use the slush fund. Want to head to the water park on a hot day – use the slush fund. Once our little one is here, we might enact a slush fund a little early just so we can do fun stuff together as a family. But trust me, it won’t be costly. I feel that debt should be paid off, savings should be built and you should be putting away for retirement first.

Health Savings Account (HSA)

If you can setup an HSA then I would recommend it. J and I don’t have one and so far, haven’t had a need. My old employer offered a Health Savings Account so I took advantage of it then. But with Obamacare and Insurance changing on a daily basis it’s hard to know keep up with the rules. Make sure you do your research on HSAs before starting anything.

HSAs are great if you have a high-deductible insurance plan. HSAs cover any medical costs that are not covered by your insurance. HSA money is tax-free and can add up for larger families with high-deductible insurance.

DO YOUR RESEARCH ON HEALTH SAVINGS ACCOUNTS THOUGH.

Child Savings Accounts

We don’t have to do this yet, but we will soon enough. Most banks offer a child savings account – our bank calls it a Looney Toons Savings Club. Each bank is different so look on their website or ask a personal banker the details.

I propose opening an individual savings account for each child in your family. It will help teach them how money works and can help teach them to save for something they want. My parents did it for me and I just loved going to the bank with my mom to deposit my savings.

My parents had a weekly allowance that I could earn. I had to complete simple tasks to even qualify for any money – make my bed and straighten my room. Once those were done then I could do extras to earn cash. I could bring in the trash cans from the street, empty the dishwasher, dust, etc. I earned a certain amount for each chore. At the end of the week it was payday. We would add up how much we made, then we put 10% back into savings and 10% into tithing.

About once a month, mom would take us to the bank and let us put our savings into our very own account. I just loved seeing how much money I had and watching it grow – it might be why I work as a financial advisor these days. Money just fascinates me!

That’s the checking and savings accounts I have and would recommend to your family.

Getting your money in order can be super beneficial to you. It can really make budgeting and tracking your money easy. Your goal for your money should be to have it work for you!

Let me know how having multiple bank accounts works for you and if you’ve found anything easier. I love to know!

How Did You Do for Financially Focused?

Posted on by Meredith Rines, MBA, CFP®

finance focus, merelynne

Well February is done, which means our financially focused is over. Well not really over. Can being focused on your financial well-being really be done? Probably not and shouldn’t be.

But let’s recap how we did for the February challenge.

We started preparing for the baby by already budgeting as if he is here.  That was a huge one for us.  By taking a goal or a life event that you know is coming up and adding it into your budget then you’re a step ahead.  We decided early on that we didn’t want to be surprised by how expensive the baby will be.  I mean, let’s be honest – I know we aren’t budgeting enough, but as first-time parents we just have no idea what’s enough or not.  So we’re doing the best we can.  We budgeted for extra grocery expense to cover diapers and factored in the cost of daycare.  One thing we didn’t budget in until now was the cost of adding him to our insurance.  Both J and I are lucky because our employers cover most of our health insurance costs, but the baby will be a different story.  We compared the plans between employers and are now saving that amount, too.

We setup an extra savings goal of $300 about half-way through the month, which we knocked out of the park.  The extra $300 to save was a bit tough.  We had to cut back on eating out and buy anything that we really didn’t need.  But it was worth it!  It’s great to see that extra money in our account.

We saved money on our laundry by switching to using DIY foil dryer balls instead of a Bounce sheet.

The Easier Cash Envelope System, Dave Ramsey

We also re-positioned our money to work better for us by creating an easier to use cash envelope system.  I love not carrying cash with us anymore.  It’s nice to have a simple debit card lined out for each spending activity.  It makes it a lot easier when I’m a the store and I have to say – my wallet is loving not carrying around all that extra weight!  Just make sure you’re keeping track of how much you have left in each account.  It would not do you any good to overdraft and have an extra fee!

Thrift Store and Flea Market Shopping Tips

We even talked about some great thrift store and flea market shopping tips that could save you so much money.

How did you do?  Did you take control of your money this past month?  Money is a great tool to utilize, but you have to make sure you don’t let it control you.  It’s easy to do.  Easy to spend too much and save too little.  So with a little thought and preparation, you can really show it who’s boss.

DIY Dryer Balls – How to Save Money on Laundry

Posted on by Meredith Rines, MBA, CFP®

DIY Dryer Foil Balls, diy dryer balls

To go along with our Focus on Finances this month, I’m sharing a tip on saving money with your laundry.  This one little tip can really add up the savings!  These are the easiest DIY dryer balls you will ever see! Hands down!

This past weekend I decided to really catch up on all of our laundry.  When I say really catch-up that means run close to 6 loads in one day.  For two people that’s a lot.  Now if you have several children and they all play sports or are just kids then you may feel 6 loads is an average.  But around our house, 6 is a lot.  

DIY Foil dryer balls, save money on laundry, diy laundry balls

What can 2 people dirty up in one week that requires 6 loads of laundry?  Well… let me tell you…

I did our clothes, J’s work uniforms, sheets and towels, blankets from our bed, blankets from the couch, and rugs.  I probably could have broken up our clothes into at least 2 loads, but our new washer is the best.  We just purchased a brand new washer from Sears.  It is the first new washer I’ve ever owned.  I’ve always had hand me downs, which was great!  They were free and did the job just fine.  But now that I’ve had the taste of what a new washer is like… boy! I can’t wait to get a new dryer to match!  This new washer really holds a lot, especially compared to the little guy I had beforehand that got me all the way through college.

By the end of the day, our clothes were full of static.  It didn’t help that I had been going non-stop and the fact it was barely 30 degrees outside all day.  Whenever the temperatures drop, the static goes up in our house.  I have been researching like crazy on a way to handle all of our static electricity without adding too much to our laundry costs each month…

how to save money on laundry

Let’s be honest, when it’s 30 degrees or even when it’s 90 degrees, I am not going to hang our clothes on a line to draw.  During the summer months, we have too many mosquitoes and the last thing I want is to give them a landing ground that will end up inside.  Plus, I’ve never hung clothes on a line.  Sure, we hang our nice clothes up to dry, but not t-shirts and towels.

I think I found it… I found the solution…

Foil dryer balls.

DIY Dryer Foil Balls

I’ve seen the wool, felt balls all over Pinterest and they look great.  But let’s be honest for a minute, I am not going to take the time to make them.  It’s just going to happen.  I need a quick-fix.  Plus, I don’t have the yarn I would need to make these amazing dryer balls and I’m frugal… so I like using what I have on hand.

Enter in…

Foil dryer balls.

What?!!?

You read that right!  I am now using foil dryer balls in my dryer.  They work great!  I did some research to make sure I wouldn’t be starting a fire by putting foil in my dryer.  After reading about it, I realized that it would be safe.*  The dryer hose is foil, right?  I gave it a try and I’m in love.  

Here’s what you need for foil dryer balls:

a few sheets of foil

tennis ball (optional – see below why you may want one)

make your own dryer foil balls

If you want to just use foil, then wad one piece of foil into a ball and then wrap the other sheets over it to make it a bit bigger.  The foil dryer ball will last quite awhile so there isn’t a need to replace after every cycle.  These will really, really help with static cling.  Especially right now with the weather getting colder and the air getting dryer, I’ve noticed most of our loads of laundry are full of static electricity.  

dryer balls

Ever since I started using the foil dryer balls, our static issues have vanished.  

Why is a tennis ball optional?  Well let me tell you…

A benefit of the felt dryer balls is the weight.  The weight of the balls causes them to bounce around while the dryer is going, which helps make your clothes softer and fluffier.  So, that’s where the tennis ball comes into play.  

You can wrap a tennis boil with the foil.  Do several layers of foil.  They will hold up in the dryer and provide the weight you need to get your clothes and towels extra fluffy.

Soft and fluffy cloths aren’t really a necessity in our house.  I hang-dry most of our nice clothes and I don’t really care if our bath towels are extra fluffy or not.  But it is a great option that’s still inexpensive.

I bet you will notice a difference when you start using foil dryer balls in your dryer.  I did!
*please do your own research to make sure.  Just because it worked for me, I don’t want anyone blaming me for any mistakes.

The Easier Cash Envelope System

Posted on by Meredith Rines, MBA, CFP®

To go along with our Finance Focus February theme, I’m sharing a cash envelope system technique that is way easier then carrying cash.

The other day while doing our budget, which I update almost daily (I share why below), I took a close look at how we were doing using Dave Ramsey’s envelope system.  I shared how we got started on it and how we set it all up.

We so enjoyed carrying cash with us and that it was always super easy to have at our finger-tips.  I even loved going to the bank twice a month to pull a wad of cash out – I need so many $20s, so many $10s, so many $5s, etc.  It was awesome!

Dave Ramsey envelope system

NOT!

It got old, real fast!  So I came up with something else… a technique that works best for us.  I call it…

The Easier Cash Envelope System.

The Easier Cash Envelope System, Dave Ramsey

I know, I know.  I’m super creative with my names.  You don’t have to tell me how I should win an award for coming up with the best name ever!

I was at the bank one day, waiting in line to withdrawal our cash and I was just annoyed.  Don’t get me wrong, I love our bank.  The people are nice and they are so easy to work with, but it was getting old.  On this particular day I decided to go inside.  It was always easier to go inside to do a mix-match of cash withdrawal.  Plus, it was raining so I thought it would just be easier.  I guess everyone had the same thought as me because the line was long.

As I’m standing there I kept thinking that there had to be an easier way to do this.  There just had to be!  

I came up with an idea and ended up talking with one of the personal bankers.  I would open up two more checking accounts.  One for me and one for J.  I would connect them to our main account and then every two weeks I would just transfer the money over.  Genius!

Our bank is great!  There is no limit to the number of checking accounts you can have and no minimum balance requirement.  That way if J or I ended up spending every last dime then we would not be penalized.  I even set up overdraft protection (at no cost, unless we used it) that our main checking account would cover.  We never plan to overdraft, but it doesn’t hurt to have the protection.

This easier cash envelope system was working perfectly!  I had my debit card, J had his and we were in happy-happy land.  J was never crazy about the  idea of a debit card.  He likes cold hard cash.  That way he knows at any given moment how much he has left.  I like the debit card because I don’t spend it as fast.  He has weekly bowling that he has to pay for and it’s either check or cash.  So the debit card wasn’t the easiest tool for him.

So we compromised!  Marriage is all about compromise, right?!

I took his debit card and made it my grocery account.  He goes to the bank and withdrawals his own miscellaneous money.  

Now every two weeks I transfer my miscellaneous funds to my account and I transfer our grocery budget to our other checking account, then J goes to the bank and withdrawals his cash.  Which means no more waiting in lines for me!  No more post-it notes with how many bills I need and feeling like I’m slipping the teller this awful “hand it all over” note.

cash envelope, merelynne

So easy!

Here’s how our banking situation looks like:

Joint Checking – all of our incomes comes in and our bills come out of this one.

My Checking – whatever I want to spend the money on – hair, clothes, books, etc.

Grocery Checking – we spend this at the grocery store (#duh)

Emergency Fund – we keep at least our insurance deductible amounts in here, plus a little extra

Tax Fund – we transfer money into this account each month so that by the end of the year we have enough to cover our personal and real property tax.  Plus, we have our home insurance that is paid from here in the summer.  

I could probably add a vacation savings, but until we’re debt free that’s not a huge priority.  If we have a trip plan then I just transfer bonus money into our emergency fund and keep up with it on our budget spreadsheet.  I’ve shared how I use Google Sheets as our check register, well I use it for our budget too.  That way we can access it from anywhere.

I’m telling you, if your bank will let you open up multiply checking accounts that are connected AND it doesn’t cost you a monthly fee… do it!  This is the easier cash envelope system that makes it much more likely for you to stick with it.  

No more having to remember to run to the bank, no more carrying a bunch of cash and a massive wallet with you.  This is what works!

To read more focus on finance tips and posts, check out here.

Establish a Savings Goal – Focus on Finances

Posted on by Meredith Rines, MBA, CFP®

Establish a Savings Goal

Alright, it’s time to get serious.  We’re about half-way through the month of February and we’ve been financially focused all month.  It’s been great.  We’ve been keeping an eye on our spending, watching every penny.  It’s paying off too.

By looking at our budget, we’re on track to really accomplish some great goals this month.  However, there is one goal I want to add to our list.

Why add something that could mess us up?

Well folks, I like to live on the edge.  I want to push our boundaries.  Why?  Because I can and I know we can rise to the challenge.

Our newest goal is to establish a savings goal.  We are going to save $300 by the end of the month.  That’s right, 300 big ones in less than 20 days (17 days to be exact).  It’s going to be a lot of work and take a lot of sacrifice, but it can be done.  Why $300?  Well we’ve had a few necessities come up in the past few weeks (darn hot water heater going out!) and an extra $300 in savings would really help us get over the hurdle.

Think about it! In less than 20 days you could have an extra $300 saved.

That’s huge!

Your goal doesn’t have to be the same as mine.  Talk it over with your spouse to set a realistic goal for your family.  Get your whole family on-board with this one!  We’re going to skip going out to eat these next two weeks which will easily save us close to $100.  Boom!  Now we only have $200 left.  We’re going to stay in town, which means quite a bit of savings in gas and having to spend money on food.  We’re also going to only buy the necessities at the grocery store and use up the extra meat we have in our freezer.

Here’s how to hit your new savings goal:

Start using your cash envelope system – today!  Not sure what a cash envelope system is or how to get started.  Read this post.  It will help.  I also answered a few questions about getting started with the cash envelope system – you can read that one here.  It’s super simple to use and really makes you aware of your spending.

Cut additional spending.  Take a look at your budget and wipe out everything that you don’t need to live on – eating out, shopping, etc.  No more going to the local coffee joint for your morning jolt.  Make a list of what you’re spending money on every week and see what can be cut out.  If you’re keeping up with your budget, then this is an easy step.  You should already be tracking what your spending.  I recommend using Google Sheets to track your spending.  We use it as a check register so it can be accessed anywhere!

Start your creative juices.  Start thinking of things you can do with your spouse, your family and with friends that doesn’t cost money.  I like hosting pot lucks with friends.  That way everyone brings a dish and you can sit around visiting.  J and I like doing movie nights together.   We’re cuddle up on the couch with our pups and have a nice date night at home.  We watch a movie we have on hand or see what’s on TV.

Plan your meals.  By planning ahead on what you’ll be having for breakfast, lunch and dinner then you can really save some money.  We like to meal plan on Sunday nights then we make a list of the items we need to make it all happen.  Make sure you’re checking your fridge, freezer and cabinets for anything you might need that week.  You could start by seeing what you have on hand and planning around those items.  That way you can save even more!

Don’t spend money you don’t have.  This is an easy concept, but some many people fail at it.  You tell yourself that you’re using your credit card for the reward points, but don’t actually pay it fully off.  You send in about $1,000 a month, but are spending close to $2,000 or more.  That’s how your debt can spiral out of control!  Use cash or debit cards for purchases.  To hit our goal of saving $300 in 17 days we will only be using cash or our debit cards.  Our credit card, though it offers nice reward points, will be sitting at home.

What are you going to do to save that extra money this month?  Make it a big goal that you can really see yourself achieving.  It’ll be a nice accomplishment in 17 days to see all the money you saved. Let’s get started!

Financially Preparing For Baby

Posted on by Meredith Rines, MBA, CFP®

How to financially prepare for your new baby.

The other day J and I were having our usual discussion of going out for dinner or staying in.  I know I’ve said this a hundred times…once I’m home then I hate getting back out, but I hate cooking even more!  

After some serious thought and way too much time, we decided to stay in.  Really the thought process went like this…

J: What’s for dinner?
Me: I don’t know.  What do you want?
Me: I don’t want to cook and clean, that’s for sure!
J: Well we could go out.
M: Yeah, but I want to eat for cheap – like less than $20.
J. Well I don’t want fast food.  So what do we have here?

There you go… I’m stuck on how much we spend and J doesn’t want crap food.  So we stayed in and cooked.  We cooked dinner together and then worked on the dishes together.  It was a win-win-win.  Win because we didn’t spend any money since we used what we had.  Win because he had a healthy dinner.  And win because I didn’t do it alone.  

These small thought processes have overtaken us lately.  As we’re preparing for the baby to arrive, we’ve been thinking more and more about money and teamwork.  We’ve been taking a few steps here and there to prepare.

As you probably can tell, the theme for February is Focus on Finances.  So today, we’re focused on financially being prepared for our soon-to-be baby boy.

I want to share how we’re financially preparing for baby with a small budget.  

I mentioned a few weeks ago how we were making small budget changes since the beginning of the year, but I wanted to dig deeper into a few areas that are going to make a huge difference.

habits for a better life,

When we put together our master budget back in January, we talked about how our lives were going to change with a little one around.  We knew that we would have late nights, long days and be overwhelmed at the beginning.  We really have no idea what to expect.  The one thing we did agree on is…

…we do not want to be thrown a financial curve ball when we’re lacking sleep.

So to overcome this fear, we started budgeting as if the baby was already here.  We had two reasons for this:

  1. we didn’t want to face a financial hardship from our lack of planning.
  2. we wanted a financial plan for our money since we are going to have another person to care for and provide for.

Here’s what our budget looked like back in January – I have changed some of the numbers because, well, that’s private.

You will see two categories that may not make sense for a couple who doesn’t have a baby yet.  Those are Groceries & Diapers and Daycare.  Both of us will be working full-time so it’s important we find a daycare for our little guy.  

We estimated the monthly increase to our grocery budget to cover diapers, wet wipes, and such.  That way we could have a more accurate budget to go off of.  Then after researching we discovered a daycare we liked and found out how much their weekly charge is.  We figured by adding these expenses in now then we can start to learn what are spending will look like.  

Honestly, I didn’t want to wake up one more out of diapers and not have the money in our account to go by them.  That was a huge fear for me.  

As a team, we decided to add these estimated expenses to our budget so we could be prepared.

Here’s what you need to do to add in your future expenses:

  1. Take an educated estimate of what the expense will be.  Call around to get an idea of what it’s going to cost you.  You may have to think outside of the box for any expenses you have coming up.  For us it was daycare and a dog sitter.  We knew when we traveled to visit family we probably wouldn’t be able to bring our 3 dogs with us the first few trips.  So we factored in the increase cost of boarding into our budget.  
  2. Figure this estimated cost into your monthly or weekly budget at least 6 months before the expense will start.  This way you can get a feel for how it’s going to effect your budget.  Now if you find out the cost is too much for what your income and other living expenses are then you can make any changes, find a less expensive option or see if it’s really worth doing.  At this point you can also weigh other expenses you’re paying for to make sure they are still worth it.  For instance, you’re budgeting for your newborn baby’s formula costs and learn it’s going to be a little too tight for comfort around the end of each month.  Well maybe at that point you decide to lower your cable package to free up some cash at the end of the month.  Small changes will make a huge difference.  In the end it’s all about educating yourself before the stress of a newborn comes.
  3. A great tip is to physically transfer the money from your checking account into a separate savings account.  This way your checking account will be accurate with your anticipated new expenses and you won’t feel tempted to spend money earmarked for a future bill.  We transfer ours into our emergency fund because we know the account is off limits except when there is a legitimate reason.  By placing the money into your savings account you will quickly build an emergency fund for those unexpected needs after your baby arrives.  

I also recommend building your emergency fund to $1,000 plus what your insurance deductible is going to cost.  A few weeks after your baby arrives you will start to receive your hospital bills.  Luckily insurance will cover majority of the cost, but you could still be liable for a hefty deductible.  Most deductibles range from $500 – $1,000 per person in your family (ours is $1,000 per person with a $5,000 family deductible).  You will feel a huge relief by having an emergency fund of $1,000 (for those unexpected emergencies) and with an extra $1,000 to cover your insurance deductible.

To be able to save this extra money before the baby arrives, you can use a Sinking Funds Spreadsheet. It’s an a simple tool that gives you a clear view of what categories you need to be saving for and how much you should be putting aside each month to reach your goals.

After we added in the necessities into our budget, we started to look at items that we knew we would need versus the items we just simply wanted.

Needs vs. Wants

  1. Crib – to me a crib is a need.  Sure you can make due with a less expensive bassinet, but for us a crib makes more sense.  We know we want our little guy to be in his own bed starting at a young age.  Plus our bedroom is small and there will not be room for a bassinet or a pack-and-play next to it.  We have seen talk about a Dockatot and are curious about those.  It might be something to invest in (or ask for as a gift), but we will cross that bridge later.  So we plan on investing in a crib that will eventually change into his toddler bed.  We have done research and our deciding on a crib from Walmart.  We asked for one from my parents and they are amazing, so we are getting one.  We chose from Walmart because it will be easy to exchange if something is missing from the box (since we live in a smaller town), plus they have the best price.
  2. Car Seat – again, this is a no brainer.  We must have a car seat and I want one that is rated high.  We found this car seat from Chicco and fell in love.  It is rated very high on Consumer Reports for crash protection, which was vital to us.  It’s important to research safety items for crash protection, ease of use and just overall satisfaction.  That way you know you’re getting a quality piece that will last for a long time.
  3. Breast Pump – I do plan on breastfeeding so I know a breast pump will come in very handy for when I go back to work.  By doing some research I discovered how to get my breast pump for free and I highly encourage you to do the same.
  4. Swing – I go back and forth on whether this is a need or want.  Deep down I know it’s a want, but I realize just how much easier a swing will make things around the house.  So I plan on asking for a swing for one of my baby showers and hopefully we will get one.
  5. Changing Table – We have a dresser in his room that is packed full of all his goodies.  So in my mind I will be using this dresser as his changing table.  I do not see the value of investing in another piece of furniture as a changing table.  Sure they may have compartments and drawers specifically for diapers, wipes, and creams; however, this is one area that we can cut our costs.
  6. Special Bottles – Unless our little guy has bad gas, I don’t plan on purchasing expensive bottles.  I have heard good things about Dr. Brown’s and their price is comparable to other bottles I found at the store.  I think these can be good transition bottles from a newborn to older since they have interchangeable nipples for older babies.

Breastfeeding vs. Formula Feeding

We plan to breastfeeding and am hoping that it works out for us (my take on breastfeeding vs. formula feeeding).  I think breastfeeding will be a huge money saver.  Not only is breast milk like liquid gold, but it’s also free.  If you have a small budget then breastfeeding is the way to go!  However, if you decide not to breastfeed or can’t then DO NOT feel bad about it.  The end goal is to have a healthy baby, so either way you get nutrients into their system is fine.  If you decide not to breastfeed or find out you can’t, you just need to take the steps from above to add the expense into your budget.

Cloth Diapers vs. Disposable Diapers

For us we understand the added expense of disposable diapers, but this is the route we are still going to take.  If you want to keep your budget with a little room then cloth diapers may be the way to go.  However, we feel like we can make it work with disposable diapers.  A lot of moms feel that cloth diapering is great and they love how it saves money, but that’s a personal preference.  I like the ease of disposable and that draws me to them.  My mother-in-law did tell me how when her twin boys (my brother-in-laws) were younger she received a subscription for a cloth diapering service.  I think it was for the first year.  This service would take away old diapers and bring new ones each week or so.  I can imagine a service like that being invaluable and it might be worth it to add to your budget if it’s an interest.

Baby Clothes

One of the easiest ways to save money is on baby clothes.  If this is your first baby then chances are you will be receiving lots of clothes from your baby showers.  It seems clothes are one of the most gifted items to expectant mothers.  If you need to fill in any gaps then buy USED.  Consignment stores and yard sales are a great place to buy quality pieces at a huge discount.  You may even be able to negotiate a lower price at a yard sales, which means even more savings.

Also, another way to save on clothes is if you have any good friends or family members who have recently had a little one.  You can borrow the clothes their baby has outgrown.  Hopefully the seasons will line out so it makes it easier on you, but even then you can probably make most of the outfits work even if the season is wrong.  Because I don’t think it matters if you’re little one is wearing a Valentine shirt in March.  If it fits then don’t worry about it.

Finally, you will want to reevaluate your budget once your baby has come.  This is a great tool to get your new budget categories added, but reality could be much different.  I created a recap of how this preparation really helped us after our little guy was here.  We did a lot of things really well, but we didn’t fully capture everything we should have.

 



Just remember this technique can work for just about any big life change you have.

That’s what’s so great about it!

Getting ready to move?  Take a look at what changes in income, if any, you’ll be facing.  Have you looked at what the living expenses are going to be?  There is so much to consider when planning a move…

rent increase (or mortgage)
insurance increase
grocery increase
gas for your (will you be driving further to get to work?)
and many, many more

Maybe you’ll be lucky and there won’t be any increases.  Maybe the clouds will open up and you will actually have a decrease…

What about thinking of quitting your job to become self-employed.  You need to really think about what your realistic income will be and try to start living off of it.  There are some great articles out there on preparing to become self-employed.  I really liked the one “How Much to Save Before Quitting My Job” by GoGirlFinance.  

The biggest thing you have to do is plan it out, think it through and then commit.

Thrift Store and Flea Market Shopping Tips

Posted on by Meredith Rines, MBA, CFP®

Thrift Store and Flea Market Shopping Tips

Before moving to our current town, I would scour the local antique malls, flea markets and thrift stores for some really great deals.  Typically, I would buy pieces that I could re-purpose – clothes that I could sew or re-create, furniture that needed a little TLC, etc.  I loved it!  There was nothing better than waking up on a Saturday morning grabbing a big cup of coffee to go and wandering through great finds.

Now that we’re here, there isn’t as many stores that I can get lost in.  There are a few around town and now that we’re expecting our first little one, I’ve decided to kick up my hunting skills.  I’ve developed a few top tips when heading out to a thrift store or flea market.  You need to make sure you’re getting a good deal and not buying something that you will never use.  So…

Thrift Store and Flea Market Shopping Tips

Here are my thrift store and flea market shopping tips to follow:

Make a plan: In college I would wander aimlessly through the stores without a real plan or thought in mind.  I could get away with this for two reasons – I didn’t have a lot of space in my tiny apartment so that would stop me from over buying and second, I didn’t have much money.  Nowadays, I have a bit more room, but I don’t like spending my hard-earned money so I have to create a plan.

I want to know what I’m looking for.  Am I trying to find a piece that will fit above the guest bed?  Am I trying to complete a gallery wall in our family room?  Whatever my goal is that’s what I look for.  I try not to get distracted by items I don’t need.

Don’t buy what you don’t need:  It’s easier said then done.  That really cool purse is only $5 and you can think of 20 different outfits it would go with, but there’s a kicker.  You don’t need another purse that will end up in the bottom of your closet.  You have to be tough when it comes to spending money at the thrift store.  Love a dresser, but have absolutely no where to put it?  Then don’t buy it.

Keep it balanced:  I try to replace items that are falling apart or I get rid of something.  If I’m buying something that’s new-to-me then I like to donate or sell something I don’t use anymore.  That way I don’t become a hoarder and can keep my house clutter free!

Time your trips:  It’s no lie that Spring is the best time to hit up your local flea markets and thrift stores.  You know of a little thing called, Spring Cleaning, right?  Well that’s when people go through and clean out items they no longer need or want.  So it’s a perfect time to do a little shopping.  However, you can always find good deals when you have a careful eye.  I recommend talking to employees at the local stores to find out when they put out new items.

Don’t believe every price you see:  Just because it’s used doesn’t necessarily mean it’s a good deal.  You have to make sure you’ve done your homework.  Sure, you can probably look at a pair of shoes that are in good condition to decide if it’s worth the price, but look around before you buy any big-ticket items like furniture.  I like to look at craigslist to see what others are selling a similar piece for or look online to get a good idea.  If it’s not a good deal then pass it up!

What are some of your thrift store and flea market shopping tips?  I’d love to know!

Looking for more budget tips?  Check out here.

Finance Focus for February 2016

Posted on by Meredith Rines, MBA, CFP®

finance focus, merelynne

I am declaring this month to be Finance Focus February.

Here I am, about 26 weeks pregnant.  This whole nesting thing has kicked in and I’m dying to reorganize something in our home.  I’ve already got my hands on our garage and the closets and the kitchen.  But I need something else.  So since it’s late and not the easiest for me to be sneaky anymore, I’m on the computer.  With nothing to really do, my brain starts wondering and I start worrying.  Insurance for the baby? I have that figured out.  Maternity leave?  Luckily, I work for my dad’s company so I can stay home or take the baby with me.  It’s whatever I feel comfortable with.  Money?  Do we have enough?

It’s no lie that money can stress me out.  I have this love-hate relationship with money.  I’m pretty sure most of us do.  We could always do with a little more (not a lot, we don’t want to be greedy or anything), but we seem to get by with what we have.  

As I’m getting closer and closer to this baby’s arrival I have been on full-attack mode when it comes to our finances.  I know that babies are expensive.  I just don’t know how expensive yet.  So, J and I have made a pact to be really focused and really diligent about our spending until the baby comes.  That way we can have our savings built up and be ready to tackle anything.

Back in January when I was doing our annual budget, I had an aha-moment…

…I realized we need to plan as if the baby was already here.

The last thing we needed to be worrying about or stressing over was our finances when we’re trying to learn how to take care of another human being.  I knew something was going to slip.  It just had to.  There are only so many balls a person can juggle before they all come tumbling down.  So until I learn how to care for a newborn baby and what our new “normal” is going to be, I didn’t want to be navigating a new financial situation.  Make sense?

We budgeted for all of the baby expenses that we knew of back in January.

man-person-hands-coffee-large

Yes, the baby isn’t here and we’re not planning for him to make his debut for a few more months.  But I knew how much daycare was going to cost each month.  I would share that number, but from talking with my friends that have newborns in bigger cities, I realize just how lucky we are – like half-as-much lucky then they are!  So thankful!

Here was our master plan: Twice a month, I take our cost of daycare (let’s say $900 for the whole month, but it’s not that!) and we split it into two payments of $450 each.  Then we take the amount and transfer it into our savings account.  We’re already learning on how to get by with $900 less each month AND we’re building our savings account a little faster for those rainy days.  

I’ve more than doubled our grocery budget back in January and am transferring our leftover amount each month into our savings.  Because… honestly I have no idea how much diapers, wipes and everything else is going to cost us each month either.

Here’s my other finance focus thought…

Our emergency fund is the same as our insurance deductibles.  Now we’re adding another human being, which means a higher deductible for one of us.  So by building our emergency fund we are preparing for an unexpected expense.  When something comes up, because we ALL know it will then we won’t be in too much pain.

Genius!

Now, this is a learning curve for both J and I.  As both new parents, everything is going to be… well, new.  So I did a little research and saw on Parenting the cost of raising a newborn is roughly $12,000 for the first year.  Gulp!  That’s crazy!  And that was for 2010!  I know inflation and costs have just continued to climb ever year so it’s going to be a lot more now.  All I know is that we’re taking the right steps to get there.  We will make adjustments as it goes along.  But for now, we’re rocking and rolling.  What did you do to prepare for your first baby?  Any tips or tricks?  

Want more budgeting tips? Check them out here!

How to do Christmas on a Budget

Posted on by Meredith Rines, MBA, CFP®

Christmas on a budget

Christmas always comes quick around here.  I’m always caught off guard and end up running around like a crazy lady trying to get everything done.  Plus, with a baby on the way I really wanted to be conscious of just how much we were spending.  Money can get tight from time-to-time, like I’m sure most families can be.  I wanted this year to be memorable with some surprises, but I didn’t want it to break the bank.  

So I planned ahead.  A few weeks before Thanksgiving I came up with a list of what to get everyone in my family and J’s family, plus I added in my work gifts that we exchange.  Then I decided on a budget per gift, which was really helpful when it came to sticking to it.  Last year and in years past, I just decided on an overall budget for everyone.  But that never seemed to work.  I always ended up going over.  So this year, I went about it a little different.  Each person had their own budget.  If I went over on one then I had to cut from someone else.  It’s rough and cold, but it had to be done.  

I was really frugal with everyone’s budget.  I tried hard to think of gifts that were reasonable and that people would really love.  Then I did a bit of research before assigning their budget.  That way I was educated when it came to creating my overall savings goal.

Then I shopped smart.  I used ebates.com*, which I talked about the other day (check out how I make money shopping).

I enlisted my saved total from my Walmart Savings Catcher, I shopped Black Friday and Cyber Monday deals, used free shipping coupon codes and found gift packages that I could use for multiple gifts.

Once I purchased a gift, I immediately updated my spreadsheet.  I kept my Christmas List handy by using Google Sheets, which I love.  I could pull it up anywhere, no matter what device I was using.  I would add what I purchased, highlight the person showing they were done and then entered in the actual amount I spent.  

I went over on my father-in-law’s gift, but luckily my cousin gift exchange present wasn’t as much as I was planning.  So in the end it evened out and no one had to suffer.  But without using a budget-per-person I wouldn’t have been able to see it.  I would have kept spending money like it was coming from a tree and by Christmas-time we would have been hurting.

Also, by using my $70 from my Savings Catcher I was able to cut down a huge portion of our Christmas budget, which really helped us!  We ended up coming in $100 under budget this year!  I was pretty impressed with it.

Here are my top tips for doing Christmas on a budget:

  1. Make a list of everyone you have to shop for – include family, friends, and co-workers.
  2. Give each person their own budget and me strict with the budget you give.
  3. Shop deals like Black Friday and Cyber Monday
  4. Search for Coupon Codes before shopping.  I use Coupon Sherpa on my phone when I’m in store and just Google any other place while shopping online.
  5. Don’t use credit cards to purchase any gifts – use cash!
  6. Take advantage of money saving apps and websites – ebates.com* is my favorite and the Walmart Savings Catcher app.
  7. Create inexpensive gift baskets that really mean a lot.  You can find items for a gift basket that don’t cost too much, but can be really personalized.  The DIY Mommy has some really great gift basket ideas that are super easy and really impressive!
  8. Don’t be afraid to make something.  I did this last year with homemade Christmas ornaments and they went over great.  Check out my tutorial here.  

DIY Christmas photo ornament how to

*referral links.

How I Make Money Shopping Online

Posted on by Meredith Rines, MBA, CFP®

 

ebates.com and walmart savings catcher, making money shopping

I don’t like to spend a lot of money.  I guess you could say, I like to save as much money as possible!  Some call it cheap, but I call it being frugal.  I like to make my dollar last, which means I’m not afraid to get down and dirty to save a few.  I’m willing to take the time to find the best deal, submit my receipts for money back, and search out coupons.  Luckily, I have discovered a few things that help me accomplish saving money!

One of my favorite sites to make a little money while I shop is ebates.com*.  I discovered ebates.com after seeing their commercial for like the hundredth time.  I had my laptop near me and I just decided to see what it was all about.  I have to admit I was pretty skeptical at first.  They’re going to send me a money for shopping? Yeah right!  

Then I started using it.  I started small – login before ordering our dog food.  We buy dog food every 2 weeks, so it was pretty consistent total each time.  Then I received a check in the mail for a few dollars.  Hmmm maybe this does work.  

How I Make Money Shopping, ebates.com

So I added a few more – birthday gifts, clothing purchases, more dog food and toys.  This year I even did all of my Christmas shopping online so that added up to be quite a bit.

Now I have a pretty substantial cash back check waiting to be sent.  It sends automatically every few months.  I don’t have to remember to tell ebates.com to send it to me.  It’s usually a nice little bump when it comes in.

This year, I combined ebates.com* with my Savings Catcher Receipt money from walmart.com.  I do most of my grocery shopping at Walmart, so once I’m done and loaded in the car I quickly scan my receipt before pulling away.  I started in February and by Thanksgiving I had a little over $70 saved!  

I asked Walmart to send me my money via an e-gift card and within a few hours it was in my inbox.  

Then I did something crazy – I went to walmart.com through my ebates account.  I purchased $70 worth of Christmas gifts for our family on Black Friday, I received free shipping and used my e-gift card to pay.  I actually made money for not even spending one dollar!  Crazy pants!

Now I’m just sitting back waiting on my packages to arrive and my ebates.com check to come rolling in and it’ll go towards our Christmas Savings for next year.  Boom! That’s how I make money shopping online, pretty easy!

Here are my favorite money saving apps.  Check them out!

*referral links