Why I put $5 a Month into a Retirement Account.

Why I put $5 a Month into a Retirement Account.

I’ve been working on building an emergency fund. Unfortunately there have been a lot of setback which means that its taking me a really, really long time. I don’t make a lot of money so putting money way is very, very hard. Putting money into a retirement account is not really happening right now. Yet, I still put $5 a month in. Why do I do that, you ask?

Some Background:

Well, many years ago I was lucky enough to receive advice when I took my first job that I was smart enough to actually follow. At the time, I was fortunate enough to be living at my parent’s house rent-free so my expenses were really low and although my first job wasn’t paying tons I didn’t have to spend most of it. I met my personal finance teacher from high school who told me: Max out a Roth IRA as soon as you can. So I did. So I took her advice and saved up pretty quickly to open my Targeted Retirement account from Vanguard (a pretty basic and simple approach for anyone who is looking for a simple retirement account). Once the account is open with the initial minimum amount, you can deposit as little as you want (assuming you haven’t maxed it out- no worries there!). Most accounts have a pretty large initial balance so you would need to save up for that first.

After that first year, I moved out, got married, had kids and dealt with life. Saving got a lot harder especially since I hit a period of unemployment. I was and still am unable to put aside money for retirement. But… I decided to still put $5 a month into that account.

Why?

One reason is because of compound interest. I like to think that even the smallest amount will grow and make a small difference as I grow older. I may be able to put more later on, but at least this small amount will grow over the years. A little is better than none!

But ….The biggest and main reason is because:

The hardest part of creating a habit is beginning. And saving money must become a habit in order to be successful. (That’s why its best to start as young as possible. Parents: start teaching your kids to save now!!!). Setting up an automatic deposit is the first step. And that is usually the hardest part. Fear can come into play. “What if I need the money now?” Laziness comes into play. “It’s too annoying, I’ll do it tomorrow.” Complacence comes into play. “I’ll have enough money to retire on when the time comes.” Taking that first plunge is the hardest part. But once that first step is taken its a lot easier to keep it going. Human beings work on inertia so stopping a habit is just as hard as starting, Stopping an automatic deposit is just as difficult as starting and all the same thought s and excuses come into play (subscriptions anyone?).

Once I have more money to save (it will happen one day!) then adjusting the amount to be deposited is easier than setting up the deposit. I’m talking emotionally here- not physically! The habit has already been created- I will be just adjusting the amount. A much easier task! If I need to increase in really small increments I can do that as well! Slowly, month by month, that $5 is creating a habit that will be hard to stop. It’s making it so much easier to save even if the amount is negligible!

Sometimes it seems that small amounts don’t really make a difference. When we do the math it seems depressing. There are so many articles and blogs out there bashing the “latte factor”. But- when you do save, even the smallest amount, and you do resist the impulse to buy something (even if it’s cheap) you are creating habits that will hopefully last a lifetime. And that is most definitely worth it!

How to Save Money on Gifts

Let’s not kid ourselves. There is no way to have an extensive gift list and but the perfect gift all on a miniscule budget. In order to REALLY save TONS of money on gifts you have to do the following:

  1. Give less gifts
  2. Give smaller gifts.

If any of those work for you-then do it! We should all reduce the amount of materialism happens around the holidays. But if you are going to disappoint your children for life or cause an irreparable family rift then you can’t just skip presents or buy something from the dollar store.

Here are some ideas that can help you save some money on gifts. If you are lucky and diligent then this may help you tremendously. The best way to tackle overspending is to make a STRICT budget and really stick to it. You can decide how much you will spend per person or total and then really stick to it.

 

  1. Be open. We all want to find and give the perfect gift and sometimes we have in our heads exactly what that gift should be. Be open, if the item you are searching for is out of your price range or is never going on sale then it’s time to think of other options
  2. Shop sales mindfully. Black Friday sales and per-holiday sales often have steep discounts on some amazing items. But keep in mind that the price you see “on sale” could have been manipulated to seem to be a steeper discount than it actually is. While Black Friday is a great day to do some shopping and a great time to find deals, don’t buy it just because its on “sale”– make sure you are actually getting it for cheaper.
  3. Shop clearance. There is nothing wrong with getting something off the clearance rack. Small children, in particular don’t usually care if something is the latest and greatest. A toy is a toy and a book is a book.
  4. Pair up. For more pricey gifts, see if chipping in with someone else can save you some money (and time). Maybe a group of siblings want to get together to get something nicer for their parents. If done correctly, this can lower individual costs and sometimes the combined gift is much nicer than what you could have afforded on your own.
  5. Give a family gift- if you have family that has many kids, maybe consider buying a family gift instead of individual gifts. If you do this properly it can save you some money. Consider a gift that everyone will enjoy-like a large toy or game or an experience that they can all do together- a membership to a museum or zoo (for example).
  6. DIY or Do it Simple. There are so many meaningful gifts that can be given that are DIY or partial DIY. Picture books, magnets, framed poems can all be lovely meaningful gifts that don’t break the bank. With a little creativity and time you can create some truly memorable items that probably will be cherished for much longer than that Starbucks gift card.
  7. Skip the babies. And if you can’t then give them something small or cheap. Dollar Store or Target dollar section works well for this. They really, really don’t need something big and is honestly a waste of money.
  8. Use Amazon (yes-this an affiliate link). Amazon is currently offering free shipping for all shoppers and has rolled out a targeted program allowing Prime members to have all their items ship at once which allows add-on items to ship without a $25 minimum. Keep on scanning deal sites and flash sales to score some great deals.
  9. Use deal sites. There are so many blogs, twitter accounts, and Instagram pages that are devoted to finding you great deals. Check these every day and sign up for alerts to get the limited time offers that are available.
  10. Use Ebates (again-an affiliate link). Don’t spend more because you think you will get cash back as the amount is not that large. But it does add up especially if you do a lot of shopping online. And its always nice to get a check a few weeks after the holidays are over.

Do you have any tips for saving money on gifts? Hit the comments or let me know on Twitter!

Shopping and Kids: A Terrible Combination

How To Say “No” To Your Kids

We’ve all seen it: the kid screaming in the store because they so desperately want the toy that is the only thing that is standing between them and eternal happiness. And the mother, red-faced and angry, trying to complete her shopping while her kid is screaming and howling across the store.

And sometimes you are that mother and the only thing standing you between you and eternal happiness is your kid stopping to scream. So there are really only two options: give in to the kid or have a shopping trip from hell. Neither are ideal. This is only made worse if you cannot actually afford to buy the child said item. Kids don’t really get that when it comes to bread vs. random action figure then bread wins every time. They just assume that they will be well-fed, no matter what. And it comes down to us, the poor parents, to make those difficult decisions (not). But no matter how tight money is, there is probably not a mother in the world who considered giving in to her child when that tantrum starts.

Two weeks ago, I had a lot less cash than I usually did. This meant no extra spending on anything. Since I am very strict about using my credit card (emergencies only-and that means medicine.) I had taken my kids to the park and I just couldn’t deal with the inevitable walk home past all the lovely shops on the way to my house. Even without the possible tantrums-who can handle that look of longing and heartbreak on those adorable faces? So I did something that I thought was pretty smart- walk the long way around and miss all the stores entirely. It took longer-but hey-we can all use a little extra exercise!

So how do you say “no” to your kids?

The best way is to avoid the situation altogether. Basically, I don’t take my kids to the store. Ever. And no-this doesn’t mean that I just leave them at home with a babysitter or ordering everything online. This usually means, early morning trips or very late store trips. Or waiting until my husband comes home or husband doing the shopping instead of me even though I don’t like the vegetables he picks out. It’s not easy to organize this way but it certainly beats taking my children shopping! And I save money this way! And please don’t take your kids to a really “fun” store if you are not planning/cannot afford to get them anything-it’s too hard for those little people to control themselves!

When I do take my kids to the store there is a LOT of preparation involved:

  1. I set out expectation beforehand: “We are only buying milk and bread- nothing else” or “We can pick out 1 treat- and I have to approve of it”.
  2. In the store I try to keep them as engaged as possible in what we actually have to buy. I let them pick the items of the shelf. I offer options- red or green peppers? I have them hold the items that we are purchasing.
  3. Before we get to the checkout (where enticing options are usually lurking) I remind them again: “we are not buying anything this time- only the milk and bread that we picked out” or “You already picked out one treat -we are not getting anything else”.
  4. I praise them constantly for not complaining and make a big deal when we leave the store about their great behavior: “wow! I am so proud that you didn’t even ask for a toy!”

How do you make saying “no” to your kids less painful? How do you make sure your kids don’t derail your budget?

Do you have your holiday list done?

I don’t mean the gifts you are going to buy for people. I mean the amounts that you are willing/able to spend. Money is tight in our household these days so we are setting pretty strict limits on what we are going to spend this holiday season. Thank goodness my kids are young and don’t expect much! What I do is figure out the amount that I can spend this year. I look at what I have in my “Holiday” account and figure out approximately what will be added from now until then.

Then I take the following things into account:

  1. Gifts- who I am I buying for this year?
  2. Tips- who expects them? Who do I want to show appreciation for? What is the standard for teacher’s gifts?
  3. Parties- I am throwing any this year? How much will that run me?
  4. Extras- doughnuts, hot cocoa, peppermint bark… the list goes on. Which seasonal items do we think we are going to purchase?

Then I allocate the amount that I have by all the “obligations” I have. Maybe this year I won’t make a party. Maybe I will but on a really tight budget. Maybe our “extras” will be pretty skimpy this year. Is there anything I can DIY?

I set a dollar price on gifts. As all the stores come out with their sales and catalogs I look at each one and see what fits into my price range. if I find a great deal, then I either have more to spend on that person or more for another person. For example, my budget for my son is $10 this year (I told you money is tight!). He really wants playmobile. I check all the deal sites and set up an Amazon price alert. As soon as the price drops under $10- I will purchase it and hide it! If I spend less- great! If the price never drops- I will have to see if I saved money elsewhere to buy him what he wants. If I don’t have that extra money he will have to do with something else. (It better go down in price!)

We are trying to raise our kids to enjoy and appreciate the holidays BESIDES for the gifts they receive. Gifts are MOST ASSUREDLY NOT the center of our holiday season. Of course, they are getting a gift- I am not going to deprive them of that totally. But the gift that they will receive will be within our budget- as modest as it may be. I would not be doing them any favors to raise them to focus overly on gifts or to put our (and therefore their) financial future in jeopardy to go into debt to buy them a present!

 

Poor People Can Also Travel for Fun

Vacations and traveling are fun but can get really expensive. Hotels, flights, rental cars-these all add up scarily quickly. So how can you see the world and enjoy your vacations without breaking the bank?

The best way to travel on a budget is by utilizing credit cards. There are some who manage to do crazy expensive trips just using credit card points and perks. Check out dansdeals.com or http://millionmilesecrets.com/ for advice on how to do that. I am going to focus on some easier and simpler ways to use credit cards for travel.

The concept is simple: open a credit card, spend the minimum spend to receive the sign-up bonus and then open another credit card and do the same thing. DO NOT SPEND MONEY ON A CREDIT CARD THAT YOU CANNOT PAY BACK IMMEDIATELY. The point is not to rack up credit card debt but to put your regular spending on a credit card that will give you the most bang for your buck. I will be talking more about my rules for credit cards in a later post.

My Three Favorite Cards:

  1. IHG credit card: This card gives a nice sign-up bonus but also gives you 1 free night at any IHG hotel once a year. There is a $49 annual fee but it is worth it for the free night you get! IHG also has 5000 point promotions where you can book rooms at select hotels for 5000 points. This can stretch your points pretty far if you plan correctly! This card also has a low spend required for the sign-up bonus which makes it a pretty sweet card! (https://creditcards.chase.com/travel-credit-cards/ihg-rewards-club?)
  2. British Airways Card- This card has an $89 fee but gives you British Avios which can be used on many airlines both domestic and international. I think this card has the most flexibility for international flights which is why I recommend this card.( https://creditcards.chase.com/travel-credit-cards/british-airways?)
  3. Barclays Travel- The Barclay Arrival Plus has a $89 annual fee (waived the first year). This card gives you points back on travel related purchases (besides for the nice sign-up bonus). This card is great if you want to travel on budget carriers because you purchase a ticket and then use the cash back to pay for it. (https://home.barclaycardus.com/cards/barclaycard-arrival-plus-world-elite-mastercard.html)

If you are creative, okay with being limited in your flight and hotel options than you can do some great trips for cheap! There are other credit cards that you can use as well: Jet Blue, Chase Sapphire, Southwest, Hyatt etc. Do some research and figure out which is the best for where you want to travel!

Pass the Beets! Grocery Shopping on a Budget

Part of this post originally appeared in an article on Student Loan Hero’s Blog. Read the full article here.

We’ve all heard the common advice about shopping on a budget: make a list and stick to it. We’ve all heard it. Plan out what you need and then only buy what you need. Meal plan, meal plan- we’ve all heard it! However, when it comes to foods shopping however, I say: do the opposite!

When shopping on a budget, I go to the store, see what’s on sale and then plan my meals around what I buy. So I do meal plan- but based on what I bought, I don’t buy based on what I plan. Tomatoes are on sale? Go home and google tomato recipes. Canned corn is on sale? Look in your cookbooks for recipes with corn. Some of my favorite food recipes I found because I was searching what to do with food that I bought. And you will discover new foods that you like. I had a memorable two weeks where I tried tons of beet dishes because beets were dirt cheap. Turns out I really like beets!

Obviously don’t buy two pounds of bulgur just because it was on sale if you never tried it before and you may not like it but once you do try it and love it, run out and buy some more- some for eating and some for stocking up. It’s a good habit to buy one extra thing to keep in your pantry. When a staple or a favorite goes on sale, buy it and put it in your closet.

When you plan your meals around what’s cheap and available you can stay within your budget and eat deliciously even when you’re tightly budgeted. Don’t fall into the trap of finding delicious recipes online that have exotic or expensive ingredients and then go buy them. Buy the ingredients and then go find the delicious recipes!

Do you have more tips on how to save money on food? Hit the comments!

 

Read the full article here: https://studentloanhero.com/featured/money-saving-tips-mommy-blogger-secrets/

It’s a New Year! (for parents anyways)

It’s almost the end of summer and for most it’s the beginning of a new year. Forget New Year’s! For all those who have kids in school August and September are the real beginning of the new year. As a mother of 2, my year begins now and ends summer time! And it’s time for New Year’s resolutions! This is a great time to look over your budget and make some plans for how things will be different this year. Make yourself a nice cup of coffee or tea and sit down with your partner (if you have one) and:

  1. Review your Budget- (assuming you have one!- and if you don’t make one now. Or yesterday.) As the school year begins,it is a perfect time to review how much money you can spend. As kids grow older, their needs change and summer is a good time to map out what you think you may need for this year. Anyone going to need braces? Teenage girl wanting lots of new clothes? Bike for your 5-year old? Now is a good time to review where your money is going and what you need to save up and budget for.
  2. Set up Systems. The best way to save is to set up systems. How? Set up automatic deposits into your savings accounts. Even if you only have $5 a month to spare, make sure that it is regularly deposited into a savings accounts. We have very busy lives and it hard to remember to save every month (especially when dealing with small amounts- it doesn’t seem worth it!) But when you have the money regularly going into an account it really adds up. And if you set up automatic payments and withdrawals you won’t even miss the money!
  3. Set a goal. Decide where you want to be financially next summer. Think about what your financial bliss is. Then take steps and step up systems to make that happen.

3 Tips to Boost your Savings

  1. In order to save money you have to set systems in place. When you are following a set of rules that you make for yourself it is easier to make sure that you save. So I recommend having a specific amount of money that is set aside each month- this can be wither a dollar amount or a percentage of your paycheck, ex 20%. This amount gets taken from your paycheck immediately! If you get paid by check or direct deposit- the minute the money hits your account you transfer it to your savings account. Many accounts allow you to do automatic deposits so you can set those up to withdraw money from your checking account and into your savings account the day you get paid. If you get paid in cash, immediately separate the savings portion and place it aside. Don’t go shopping before having the savings portion in a separate envelope that you won’t spend. Tell yourself that it is not your money. It belongs to your savings account- not to you.
  2. Dream! Your state of mind is very important when it comes to saving. If you feel like you are depriving yourself in order to save then you are more likely to keep spending the money instead of saving. If you allow yourself to dream and imagine what opportunities your savings will allow you later in life you will have an easier time putting that money away.
  3. Celebrate small goals! Set small achievable goals for saving and then celebrate when you reach them. You can make a visual aid to help you stay on track and celebrate those small successes!

I Don’t Need Hand Weights to Exercise

I don’t need hand weights to exercise or how I exercise on a really tight budget..

I started exercising. I haven’t done any real exercise in a while and I decided it was about time I started again. I really wanted to go to a Pilates class in the area but kept balking at the cost. After a little soul-searching I decided that I really did not need to spend money on a class to begin exercising. I took out an old DVD (good thing my new laptop has a DVD player- many new notebooks don’t!) and decided to start doing Jillian Michael’s 30-day shred instead. Of course, my mind started racing- I really should get a new DVD- this one is so old. I need new weights. I need a good yoga mat. A nice new water bottle. I can do this for hours- think of things I need to get started. Have you ever spent tons of money on a new hobby or health kick? I do it all the time!

This time, I decided it would be different. I would use the old DVD. I would use my kids play-mat as a mat. I would pull out my old, too-tight leggings. And I would use water bottles as weights. Is it effective as real weights? Probably not- but sitting in front of the TV is not great exercise yet. For some reason, I often think that if I am not going to do it perfectly I probably shouldn’t do it at all. That thinking wasn’t really doing me any favors and I did really need to exercise. So I decided to start with what I have. And I did! Yes- its not perfect but the workout is plenty hard enough without my hand weights.

I decided that hand weights would be my reward for actually sticking to my exercise regime. Exercise regularly for 2 weeks and I would buy myself hand weights. This was I would have a “reward” for sticking to my new routine and I wouldn’t spend money for something that wouldn’t get used. I wanted to prove to myself that it would be money well spent before spending it. When you are on a tight budget- every little amount adds up and it would be shame to spend it on something that wouldn’t get used. Having a reward to look forward to really helps keep me motivated and determined to succeed. I want those hand weights! Now I only have 2 more work-outs until I “earn” them! And I know I will!

Eating Healthy on a Budget- It’s Easier Than you Think

It’s hard to eat health food on a budget. Health food is expensive! But you don’t need to buy expensive foods to eat healthfully.

Here are some tips to help:

  1. Cut down on animal-based proteins. Anyways it is healthier. Dr. Greger has a great book called “How Not to Die” explaining why eating proteins that are not animal-based are so much healthier for you. And other proteins are usually MUCH cheaper. Beans are super, super cheap and quinoa is cheaper than meat, fish or chicken. Try to step away from the need to have meat, fish, or chicken at every supper and look for alternative proteins.
  2. Bulk up the sides. Side dishes are usually cheaper than the main dish. So make your main dish smaller. But instead of going hungry, make more side dishes. Eat one piece of chicken breast and a lot of rice and salad. This will fill you up and keep your budget down.
  3. Snack on fruits and vegetables. Buy what’s in season or on sale and keep it stocked. Dried fruit are expensive but fresh usually are not. Get in the habit of eating apples instead of fancy snack bars. Keep fruit and vegetables near you at work to give you something to eat and thereby resisting the vending machine temptations.
  4. Shop online. Amazon (Jet and Walmart too) sometimes have sales on healthy food that you can buy in bulk or get delivered. Keep a running list of how much things usually cost so that you can make sure you’re getting a good deal. And when a good deal comes along- snag it! Buy two and keep some in your pantry.
  5. Cut out pre-packaged snacks and drinks. This one is a basic one but is worth repeating. Stop buying pre-packaged snacks or food. They are usually high in sugar, salt or chemicals and add up really quickly. The low-calorie or “healthy” snacks are usually expensive and not so healthy! Make your own food, eat fruits and vegetables and cut down on drinks that aren’t water. Water isn’t free but it sure is cheap!

Do you have any more tips on how to eat healthy on a budget?