Posts

Person holding in hands totally empty leather wallet - crisis and poverty symbol

What is Personal Budgeting?

Budgeting is not only important for businesses, it has equal importance in an individual’s personal life. Personal budgeting is a method of monitoring and controlling your finances. This helps in monitoring personal finances and managing them accordingly. At times, we are so far away from having a budget that we end up broke within a week of being paid. This does not only leave you stressed out but it even affects your professional life. You either feel like you are not paid enough or there is no use in getting paid as you eventually end up with nothing within a week. Working and being broke leaves a drastically negative impact on an individual’s mind. Hence, it is important for a person to monitor their financial spending, analyze the problematic areas, and design a budget to improvise their financial position.

Assess your Current Financial Position

It becomes frustrating when you know that you are working on a low salary and your expenses carry the weight of a mountain. Low-income budgeting seems hard at an initial level. However, if you start small, you will be able to figure out your budget plan more effectively. 


Categorize Your Expenses

The first and best way to budget is to monitor your current lifestyle. Observe your spending habits and monitor your current financial position. Before making any budget quota, you need to list all of your expenses in the following categories.

Debt

Your long-term expenses are things such as student loans, car loans, unpaid bills, credit card balances and so one. Writing them down will give you a shockingly realistic yet clear picture. Don’t worry, they are not impossible. 

Monthly Bills that are Fixed Expenses

Monthly bills are something that you cannot avoid, they are things that you have to pay. However, listing them gives you a clear snapshot and you can even reduce them to a limited extent. These expenses include: rent, utility bills, cell phone plans, gas, and food bills.

All the Variable Expenses that you can Balance

Variable expenses are all of the leisure or emergency expenses that do not occur every month such as buying new clothes, dining out, buying new gadgets, getting your car fixed, and other fixtures and expenses that can occur at your residence. You cannot simply eliminate all of these expenses, however, you can manage a few of them and even look at which expenses are repeating quite often.

Identify Your Problem Spending Areas

When you are done listing all expenses, you will be better able to pick out the problematic areas that are straying you away from your budget every month. This problem could even highlight the areas that need your immediate attention. For example, if your car is asking your monetary attention every month, that means you need to get your car fixed properly once and for all before it breaks down completely.


Making a Budget

Designing a budget is not difficult, unless you don’t manage your steps carefully. Designing it step by step is very important as it will help you in designing a practical and applicable budget for your personal expenses. 

Step 1: List all of your liabilities and plan your gradual repayment method.

Once you have listed your liabilities, you are required to design your payback method. You should not overburden yourself by paying all of your liabilities together. Going for a crash repayment will leave you dissatisfied and you could end up adding more loads.

Step 2: List all of your necessary expenses.

Step 3: Prioritize your money goals.

Step 4: Cut your unnecessary expenses. Now, this is the most difficult part of it all. You might feel like it is practically impossible to cut down as every bill you are paying is a basic necessity. However, once you have crossed the monitoring step and all of the steps of budgeting, you will be able to clearly figure out the failure in your current spending methods.

Step 5: Be Frugal.


Tips to Create a Budget and Save Money without Going Broke

  • Be realistic
  • Always record every transaction
  • Bookkeeping
  • Control your spending
  • Don’t cut out all the fun
  • Take advantages of all the upcoming opportunities
  • Always keep on updating your budget as once you are done with repaying one of your debts, you might have some free cash to rearrange in order to pay another
  • Always keep emergency funds
  • It is best to plan your remaining cash into percentages


What are the Budgeting Benefits?

  •  You can focus on your desired money goals
  • You will be financially stable and organized within a few months
  • It will give you control over your money
  • You can arrange your expenses and spending
  • You will have extra cash in case of an emergency
  • You will have a clear picture of your personal finance
  • You will be able to improve your bad spending habits

Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.


 

 

Calender close up with a pay day marked with red pen.
The first thing we encourage you to do is deposit or credit at least 20% of every paycheck into your savings account and 3% into your retirement, IRA, or 401k account
.

People across the globe find it extremely difficult to manage their finances and money related matters. Not everyone is privileged enough to spend their lives without having to worry about financial stress and traumas in life. According to a study, a whopping 78% of people around the globe live their lives on a monthly paycheck to paycheck basis. This indicates that people have to limit their spending and save more in order to survive hard times. However, spending patterns of people, especially Americans, have changed significantly over the past decade or so due to numerous reasons. The top reasons include increased exposure and impact of social media on our lives.

Getting the Financial Equation Right

No matter how much one may argue, the financial equation of managing finances is certainly not in favor of most American households. They have been fighting against all the odds to manage their monthly paychecks but, still, haven’t succeeded to come up with a clear-cut strategy or game plan which will ensure ideal management and budgeting of every paycheck. There are a myriad of reasons why most Americans have been stuck miserably in severe financial crises and debts.

Here is the situation: once you get paid, your paycheck has to go several places at once. There are certain unavoidable expenses like rent, groceries, debt repayment, and utility bills which needs to be paid. They eat up a significant chunk of your every paycheck. The remaining, perhaps, goes into buying non-essentials. This paycheck schedule continues to go on-and-on, restricting you to save money for hard times, especially your life in retirement.

Setting the Right Priorities

Undoubtedly, saving a portion of money from your every paycheck is no easy feat. When you have so many financial situations and concerns to address, it seems nearly impossible to save money for meeting financial emergencies. So, you need to set priorities, make a realistic judgment and devise sound game plans to save money in your working years or else you may, unfortunately, find yourself in some miserable old predicament once you retire from the office. Saving money may be hard for individuals or families, but it’s certainly not an impossible task. There are ways in which it can be done.

Budgeting and Planning – Done Right

You may be good at your job and in earning money through various ways and means, but that doesn’t mean you have expertise in handling and managing your finances well. For financial help in budgeting, retirement plans, debts, savings, and investment options, it is ideal to acquire the services of a financial planner as they will have the next-level knowledge, skills, expertise, and experience in handling technical financial matters. Also, they may help or guide you in what to do with your every paycheck and how much you should contribute to your retirement savings account.

The First Things You Should Do With Every Paycheck

Contribute To Your 401k

If you expect to have a dreamy retirement one day, you need to make contributions to your 401k, IRA, or both. According to financial experts, those who start contributing to their retirement account in their 30’s have a more secure and stable future since they can worry less about financial fears or distresses. No matter how hard you may find it is to save money on a monthly basis, you should regularly contribute to your 401k or IRA account.

It doesn’t matter whether your employers offer you a retirement plan. If they don’t, you can set up your own retirement account and start contributing to it because it will be yours forever. In order to accumulate more wealth for your post-retirement life, you should start your retirement account as early as your 20’s. Contributing a tiny portion of your every paycheck, let’s say 3% of your income, doesn’t seem to be a burden on your shoulders at such a young age. If others can do it, you can too! It is far better to hire professional financial planners instead of managing money-related things yourself because they have expertise in dealing with such long-term retirement plans.

Credit Money to Your Savings Account

According to a study, a person must have an equivalent of 9 paychecks saved in order to cope with financial emergencies successfully. Financial pressures lead to a great deal of stress, emotional and mental trauma, especially to those who lose their jobs, address financial or medical emergencies, and mismanage their debt repayment schedules… No matter the causes, the repercussions are often too huge to be handled alone.

Experts recommend that you must save for your rainy days because financial problems and dilemmas do not come announced. Per the 50/30/20 rule, you must at least save 20% of your income from every paycheck and credit the proportional amount into your savings account. They also offer interest-growing potential which accumulates to become a hefty amount when you near your retirement age.

Closing Thoughts

Saving money for hard times is no joke, especially in today’s era. Cutting back on your money on almost every paycheck requires motivation and loads of temperament and spirit. It is better to hire the services of professional financial planners for effective management of retirement and saving plans as they have deep-rooted knowledge, skills, expertise, and experience in handling and managing technical money-related tasks.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Focused young couple checking analyzing utilities bills sitting together at kitchen table, serious husband and wife reading bank loan documents with laptop, family managing finances planning expenses

To Save your Marriage, Plan Wisely

Due to poor money management skills, many couples today can’t seem to survive. They often find themselves in severe agony and stark anguish when they fail to maintain a healthy financial life cycle. This further creates a lot of financial problems which may even lead to divorce. However, when you pledge yourself in marriage, you need to consider the needs of your spouse along with your own to keep the right balance. Proper planning and budgeting will allow you to save your marriage and live happily with your spouse. This indicates that financial stability and security is the backbone of every successful marriage. Couples who believe in budgeting and learn to compromise on their desires save a lot for their future and have a healthy long-term relationship.

Household Budgets can Save Marriages

Once you return from your honeymoon, it’s time to plan and play sensibly and get settled into the routine of a married life. The first thing that you should do is make a household budget right from the beginning to avoid falling into a financial crunch. The life you spent when you were single and the life you are going to spend with your spouse is going to be completely different. Now, you have to take the responsibility of spouse and bear the burden of household expenses, especially if you are the only one working. Yes, be ready for some surprise elements like your house’s wear and tear, birthday celebrations, anniversary gifts, and much more. You should be mentally ready to cater to those. For which, you must plan to have money in your savings account.

Budgets can certainly save marriages! A solid household budget will eventually lead you to make optimal use of your disposable income. By keeping monthly expenses of all nature within the budget, you can expect to save a lot of money for hard times and accumulate a significant wealth at the end of your working life. Living as a couple has its challenges and sticking to your monthly budget is surely one of them. According to studies, the number one reason for experiencing stress in any relationship is money-issues which is even responsible for 24% of all divorces and breakups.

Understand Your Spouse’s Mindset

However, bearing all household financial burdens becomes a lot easier if you and your spouse are both employed and ready to contribute to maintaining a healthy lifestyle. For ideal budgeting as a couple, you must list all sources of income you and your spouse receive that include your paychecks, rental income, investment income, additional income from bonds, etc. and be transparent about it, perhaps by creating a joint bank account. Therefore, you need to understand your partner’s mindset–whether or not he/she is willing to contribute to a healthy cause. Budgets save marriages but it all depends on the mentality of your significant other and you, whether you both want a stable and healthy relationship or not.

Set Short and Long-Term Financial Goals

If you expect to have a long-term relationship, you need to think and excel as a team. For which, you must set financial goals together. There is no denying the fact that men and women think about money differently, which means they bear different perspectives about money. Commonly, men try to save as much as they can in their working life to have a financially secure and stable post-retirement life. However, women usually feel the need to provide ample supplies to their kids and meet their needs to the fullest during the present. Therefore, both can work together to build a constructive environment for their families.

A Strategic Balance Is Critically Important

Budgets certainly save marriages because they help you to determine your household needs and set rightful household priorities. Couples desire to create the right strategic balance but too often fall prey to unusual spending patterns which lead to them to face financial difficulties. Managing your finances well is one of the first step towards a healthy marriage. Those who believe in bookkeeping and recording their financial transactions properly can track their spending and cut it in areas where they can get by without it.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Woman's hand writing on a notebook with a pen on a wooden desk.Background blur backlight
There’s no denying the fact that creating a budget helps you get a better grasp on money management. Most find it extremely difficult to create a budget and those who are successful in making one, find it even harder to stick with it. Why? Perhaps, they fail to maintain their long-term budgeting and saving ambitions, which eventually results in yielding no significant outcomes. However, getting in control of your finances is extremely important no matter whether you are on the path to creating a budgeting plan for your household or business purposes.

Set Long-Term Financial Goals

In order to reach your long-term financial goals, you need to create a budget plan as it is regarded as one of the most critical financial tools that helps you meet your intended goals. Whether you are creating a budget for your household or business, you must reevaluate your priorities and gather all of your financial data to have a clear picture of your financial condition. Once you know your cash flow status, only then can you come up with a plan for ideal budgeting. According to studies, 70% of Americans fail to stick with their monthly budgets, which bears testimony to the fact that sticking with the budget is extremely tough.

Set Saving Goals

According to the 80-20 rule, you need to save and credit 20% of your income to your savings account. Saving money helps you meet uncertainties and financial emergencies, which allows you to be financially secure and stable. Building an emergency fund for unexpected times should be a top priority because emergencies can occur anytime. Although, saving targets can be based on an individual’s preferences; some set their saving targets up to 40% of the total amount they earn in a month.

Know Your Net Income

To create a budget, you need to know the exact amount of money that you have coming in. Why? Because you can only make a workable budget once you know the total income you have to work with each month. This includes everything, including full-time paychecks, part-time jobs, social security checks, child support, etc.

Track Your Spending

You need to track and monitor your monthly spending because this will reveal a lot about your spending habits. It is ideal to make a list of expenses, both fixed and variable, if you expect to create a budget that works for you. Fixed expenses include monthly bills such as rent or mortgage, car payments, and utilities. It is hard to cut back on these expenses as you need to provide them no matter what. Variable expenses include entertainment, groceries, shopping, etc. Cutting back on these items is relatively easier because of their nature. Creating a budget doesn’t have to be that hard if you know the significance of your expenses as they occur.

Adjust Your Spending Habits

Documenting your income and expenses helps you in maintaining a record of transactions that will further help you in creating a budget for the month. People who find it hard to stick with their budget are those who can’t control their reckless spending habits. With increasing e-commerce platforms, it has become tougher to restrict ourselves from impulsively buying products that look visually appealing and attractive. Since humans have the tendency to fall prey to our desires, it can be quite challenging to cut back on our income and save money for hard times. However, if we expect to create a budget that works for us, we need to adjust our spending habits by keeping track of our income and expenses.

Keep Checking In

To stay on top of your expenses, you need to continually keep checking back in. Fortunately, there are budgeting tools and apps out there to help set your priorities straight and have a budget that is easier than ever to create and follow. Besides creating a budget, you need to keep checking in and reevaluating your budget continuously.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Multiracial friends group using smartphone at university college - Young people addicted by mobile smart phone - Technology concept with connected trendy millennials - Soft pink pastel sunshine filter
Just like all other generations, millennials have to face a unique set of challenges in their transitional journey into adulthood. Entering into “the real world” has been tough for the current young generation because of uncertain economic times as well as the burden of student loans. Money management has to be a top priority if they want to succeed through these tricky times.

Budgeting is vital for everyone. However, it is crucial for individuals who are in their 20’s and 30’s because it will eventually decide the quality of life later on. Keeping track of your financials ensures that you do not make imprudent money decisions and that you practice healthy spending habits at an early age.

Budgeting Tips for Millennials

Look at the Bigger Picture

Before you get into any budgeting details, you must draw an exclusive overview of all of your income streams and how you are currently managing them. If you believe that you are not earning enough money to make ends meet, it’s probably time to either look for another job or cut your expenses. One way to move up in your current job is by giving 100% to even the most insignificant tasks. This might incline your boss to notice your sense of responsibility which could lead to a raise or promotion.

Having a clear picture of your savings and investment options is also a part of budgeting. Millennials have to be ready for times that are coming up ahead. Invest in a retirement account as soon as possible because this will allow you to start contributing to it from the very beginning. There should also be some kind of emergency fund, which can be used in case of unforeseen circumstances. Basically, you need to look at the bigger picture when making your budget rather than focusing on short-term goals.

Form a Budget

The ultimate purpose of a budget is to allow you to live comfortably within your means and save enough money for your future. The very basic ingredient of a budget is data. All of your income, expenses, debts, and any other financial affiliations will be presented in the form of numbers or data. Add up all income from whatever sources there are in order to begin your budget.

Once you have accounted for income, try detailing your expenses along with the category they belong to such as living expenses, bills, loan payments, rent, and others. Millennials often tend to let go of small expenses that they consider to be unimportant. However, these small amounts tend to grow significantly with time, therefore, they must be catered to from the start. 

Subtract the income from expenses to have a clear overview of what you have to work with each month. The next plan of action can then be decided based on the data in front of you. It all depends on your what you are planning to spend and then saving the remaining balance, which will make all the difference in the end.

Refine the Budgeting Strategy

Millennials quite often have to deal with unforeseeable situations because of the fast-paced world we live in. They come across various instances that may require you to spend outside of your budget. To manage such unforeseen circumstances, it is recommended that you should keep enough space in your allocated budget. Allocate some amount to expenses that may occur without any prior warning.

This is also the time to refine your budgeting strategy as most of the basic elements are in place now. As portrayed in the above scenario, everything might not turn out to be how we planned, therefore, a refined strategy basically caters to all anomalies that can affect your budget.

Seek Help from Technology

As we see, the advanced solution of almost every problem is technology. Millennials can similarly seek technological solutions for their budgeting needs. There are apps that can help you:

  • Track cash flows
  • Optimize investments
  • Set up a detailed budget
  • Receive alerts
  • Provide updated balance details

Being able to keep track of all these activities in one place is an extremely useful way to manage your budgeting needs and they must be implemented by every millennial in order to stay afloat in today’s society.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Creative abstract business financial accounting, electronic banking and making money success concept: 3D render illustration of modern black glossy touchscreen smartphone with finance manager software app or application and color plastic bank credit cards isolated on white background
The powerful energy that you get as soon as your paycheck clears is indeed one of the most amazing feelings after a  month of putting in your hard work. However, soon, the money in your bank account gets wings and flies away, leaving you dull again. With a simple act, you can monitor your spending patterns and save a lot from the same amount of earnings. Previously, budgeting was a dull and tiring process where you had to manually add all of those excessive lists of expenses that leave you confused at the month’s end. 

Budgeting apps for personal finances is a savior in today’s era where you can manage all of your expenses from your smartphone. We all carry smartphones now as they have the power to keep us connected with the whole world. Managing your expenses, expected incomes, and savings was never easy before the evolution of smartphones. Budgeting is actually not as hard as it sounds. All you need to do is adopt a modern version of bookkeeping. The recording of your spending will show you a pattern of your expenditures and eventually you can save more money from the same amount that you receive each month. Below are what we believe to be 2018’s best budgeting apps.

Mint

Pros

Mint is the most popular budgeting app that provides its customer with plenty of features. The app is designed by Intuit. Its popular features are:
  1. Keeps bills and money all in one place
  2. Gives alerts and reminders for bills
  3. Creates budgets
  4. Helps in meeting your savings goals
  5. Prepares reports and charts on a weekly basis
  6. Knows your credit score
  7. Manages your portfolio and finances together
  8. Secure app with multi-factor authorization

Cons

  1. Issues in updating that have been reported by customers
  2. Issues with linking with a few bank accounts
  3. All features are available on the web version only

Platform for Mint

IOS
Android
Apple watch

Software Requirements

IOS: 10.0 or later
Android (depending on your handset)

Cost

Free with adds


You Need A Budget (YNAB)

Pros

  1. Bank Syncing
  2. Real-time access anytime from your mobile phone
  3. Freedom for debt pay down
  4. Achieves your goal by tracking them
  5. Gets proper reports and summaries
  6. Live support and personal support
  7. Easy to use
  8. Reported as the best app for getting out of debt

Cons

  1. Fewer features compared to other apps
  2. No reporting for investments

Platform for You Need A Budget

Android
IOS
Apple watch

Software Requirements

Android: 5.0 and up
IOS: 9.0 or later

Cost

$6.99 per month


Wally

Pros

  1. Reported as the best app for tracking expenses
  2. Unprecedented insights
  3. Location-based speed
  4. Smart notifications
  5. No ads
  6. Recurring income and expenses
  7. Store photos of receipts
  8. Exports data in CSV form

Cons

  1. Less user-friendly
  2. Limited review section
  3. Does not sync with bank accounts

Platform for Wally

Android
IOS

Software Requirements

Android: 4.0 and up
IOS: 9.0

Cost

Free


Acorns

Pros

  1. Maintains portfolio
  2. Invest easily in managing your budget
  3. Watch your progress
  4. Withdraw anytime
  5. Best app for painless saving

Cons

  1. Commissions are deducted from accounts less than $5000
  2. Low investment opportunities

Platform for Acorns

Android
IOS
Apple watch

Software Requirements

Android: Varies with device
IOS 10.0 or later

Cost

$1 per month for an account managing less than $5,000


Level Money

Pros

  1. Simple set up
  2. Syncs with multiple bank accounts
  3. Syncs with multiple credit cards
  4. Money insight summaries and reports

Cons

  1. Not ideal for variable income
  2. Doesn’t provide advice

Platform for Level Money

Android
IOS

Cost

Free of cost but not for fluctuating income



Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

Portrait of smiling family with grandparents standing against tree
There is no specific age to fall into financial folly. With every new monetary milestone, financial goal and responsibility comes a whole new perspective of how you manage your finances or mess it all up. If you find yourself guilty of a spoiled personal financial viewpoint, you are not alone in this matter. In fact, every generation reveals many significant mishaps, poor choices, and financial mistakes that its members often make. The smartest way to avoid making or repeating such blunders is to recognize and understand such issues before its too late. Keeping that in mind, here are five of the most common money mistakes that each generation seems to make.

1. Individuals in Their 20’s – Must Overcome the Fear of Investment

Young individuals need to invest significantly into growth stocks. Though they accompany some risk, they offer the immense potential for greater returns over time. Sadly, too many people in their 20’s are too afraid to take risks or are extreme risk-haters that avoid investing. Rather, their portfolios are inclining heavily on their assets and very little on stocks.

According to experts, one of the financial mistakes of risk aversion stems from financial illiteracy and a terrible generational fear of failure. In addition, they believe today’s young generation is more skittish as a result of unpredictable events they have witnessed in their lifetime such as the financial meltdown and the 9-11 attack. To date, mutual funds are one of the most practical ways to ease the angst about investments as they begin with riskier growth assets and, over time, slowly transition to more conservative holdings.

2. Individuals in Their 30’s – Too Much Expectation and Information

Today, more and more Americans are waiting until their 30’s to begin a family or purchase a house, marking this age as a chaotic time. Although these young adults most often think that they must be living the way their elders did, it takes considerable time to build and maintain that level of financial status and comfort. Attempting to live that ideal lifestyle by shrinking credit card debt and purchasing a big house will eventually make it more difficult to fulfill their long-term financial goals.  

Making poor investments is one of the most common financial mistakes that today’s 30’s generation makes due to lack of financial knowledge of the several potential opportunities and available options. Young investors lacking the willingness or time to educate themselves might consider approaching financial professionals and bookkeeping experts for smart decision making.

3. Individuals in Their 40’s – Baring Family Expenses All Alone

The 40’s is the midlife period that brings the toughest expenses of all – raising kids, buying homes, maintaining a family, baring their children’s education expenses and possibly even caring for an aging parent. Such burdens have to be managed proactively to prevent both short and long-term difficulties. Baring all of the financial burden alone is one of the biggest financial mistakes that the 40’s generation makes today.  Rather, they must encourage sharing the financial burden among other family members and encourage their children to be financially independent by working a part-time job or applying for scholarships. Also, they should start living within their means and build an emergency fund as soon as possible. 

4. Individuals in Their 50’s – Trying To Catch Up

Too many people reach their fifties and realize that they have nothing saved for their retirement. Such financial mistakes can be avoided if individuals start saving for their retirement far earlier in life. With the hope of building a business to support their retirement years, an increasing number of Baby Boomers in their 50’s are turning towards entrepreneurship. However, it can render a risky proposition with both immensely significant upsides and downsides.

Although retirement feels hard and uncomfortable when one has to prioritize saving, work a side job for necessary income, and/or downsize a home and lifestyle, it defeats the fear of an under-funded retirement.

5. Individuals in Their 60’s and Beyond – Fail to Ask For Help

According to financial experts, today’s older Americans are comparatively less mature than elderly citizens of older generations. However, age inescapably lowers the brain’s analytic abilities thus making it hard to avoid financial mistakes. Hence, it is imperative for every person to have people they can rely on for financial assistance and decision making matters in their late years. These people could be your family members, friends, financial advisers or a mix of all of these.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Chubby puzzled man looking at credit cards in hands looking desperate with spending money.
A budget is an approximation of revenue and expenses over a quantified future period of time; it is accumulated and re-evaluated on a periodic basis. Budgets can be prepared for an individual, a family, a group of people, a business, a government, a country, a multinational organization or just about anything else that makes and spends money. Among businesses and organizations, a budget is an internal instrument used by administration and is often not essential for reporting by external parties.

Following a budget or spending plan will also keep you out of debt or aid you to work your way out of debt if you are currently in debt. Spending less than we make is usually quoted as the most important personal finance objective. It helps us to save for emergencies and stash cash away for retirement. It’s the principal practice that facilitates us to attain some level of financial freedom.Constructing a budget with a template can help you feel more in control of your finances.

Common Excuses for not having a Personal Budget

Individuals and families have finances, too, of course – or they should. Generating and using a budget is not just for those who need to meticulously monitor their cash flows from month to month because “money is tight”; it’s a valued tool for all demographics. Even though budgeting is a wonderful tool for managing your finances, many people still think it’s not for them. Below is a list of budget mythologies – the specious logic that halts people from keeping track of their investments and allotting money in the best way.

1. I don’t need to Budget: Having a grip on your monthly salary and expenditures allows you to make sure your hard-earned money is being put to its highest and finest purpose. For those individuals who enjoy a salary that covers all bills with money left over, it can help maximize savings and investments.

2. I’m not good at Mathematics: Thanks to budgeting/costing software, you don’t have to be; you simply have to be able to follow guidelines.

3. My job is Safe: No one’s employment is truly secure. If you work for a corporation, being laid off due to downsizing or a takeover is always a possibility. If you work for a small business, it could die with its titleholder, be bought out, or just fold. You should always be ready for a job loss by having at least three months’ worth of living expenditures in the bank.

4.  And if it’s not, Unemployment Insurance will save me: Unemployment compensation is not a definite thing. Let’s assume if a bad condition at work leaves you with no choice but to resign from your job. Unless you can prove constructive discharge (that is, you were virtually forced to resign), your exit will be measured voluntary, making you ineligible for unemployment insurance.

5. I don’t want anything big: If you don’t have any main savings goals, it’s tough to tap up the motivation to stack away extra money each month. Though, your condition and your attitudes are possible to change over time.

6. I’m Debt-Free: Great for you! But it won’t pay your bills in an emergency.

7. I always get a Raise or Tax Repayment: It’s never a good notion to count on changeable sources of income. This may be the year your business may not have enough money to give you a raise or as much of an elevation as you’d hoped for, even if you’ve earned it. The same is true of bonus money. Tax refunds are more trustworthy, but this also depends in part on how good you are at computing your personal tax liability.

8. I just don’t have the right regimen: If you’re still not swayed that budgeting is for you, here’s an approach to safeguard yourself from your own spending practices. Set up an automatic transfer from your checking account to a savings account, programmed to occur right after you get paid each time.

Conclusion:

Formulating a budget doesn’t have to be difficult. A budget can secure your future financial status and lead you to financial freedom.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Notebook with dollars, pen and calculator on wooden desk. Financial concept
A successful business is an amalgam of several departments working under its flagship in a harmonious way. The most important of all is in the department of finance, which is the backbone of all other departments. The finance department is responsible for providing fiscal value to all other departments to make their management possible. In order to make the operations of a business coincide with it’s strategic plan, effective budgeting is required. When planning a budget, efficient techniques are adopted in order to make it an effective one. Each organization or business establishment differ in nature, therefore every organization is advised to adopt budgeting strategies depending upon its characteristics to make its operations effective and feasible. The following are the effective budgeting techniques which can be used in order to inoculate efficiency into the operations of an organization.  

Start from Scratch

Budgeting plays a vital role in operating a system of an organization efficiently. In order to make the task feasible, it is advised to start from the scratch. Starting from scratch means training yourself with all of the terminologies and equipment required to prepare a smart budget. Therefore, entrepreneurs are advised to take training courses and obtain certifications to acquire sufficient knowledge regarding budgeting.

Preview your Already Existing Budgeting Plans

In order to inoculate efficiency into a business, it is necessary to review your existing budgeting plans to avoid errors and insufficiency. After being trained for appropriate budgeting, all business owners and entrepreneurs are advised to review their already designed business plans in order to generate error free results. Bookkeeping is the most trusted methodology used to test the credibility of a budgeting plan as it provides a large portrait of all activities performed on a single platform. 

· Go for Long-Term Planning

Every organization started with certain intrinsic properties which are different from the other. Therefore, budgeting techniques followed are planned according to the requirements and nature of a business.  Bookkeeping is the only concept which is applicable to every business as it is considered responsible for providing a clear notion of every task performed or to be performed in a company. It supports the stance of designing an effective budget for a company which also makes long-term planning of a company’s operations possible. Entrepreneurs are advised to go for long-term planning in order to avoid any chaotic situations in future; for instance a specific budget section must be allotted for the time of recession(if and when it comes).

· Look to the Future

Financial management is a broad cloud; it involves various genres such as revenues, expenses, cash models, cash inflows etc. Therefore, effective budgeting is the one which caters all of these concepts under a single flagship in order to run a business successfully. Financial experts are advised to plan a budget (with the help of bookkeeping) looking at the upcoming planned events of an organization so that efficiency of a business establishment can be increased.

Final Note

Efficiency in a business is achieved when it produces maximum goods and services at minimum possible cost. In order to inoculate efficiency into a business, effective budgeting is the best strategy. It responsibly allocates the optimal number of shares and monetary worth to every department so that its operations can be accomplished successfully.

Check out America's Best Bookkeepers
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.

 

Frustrated and overworked businessman burying his head uner a laptop computer asking for help
A budget is a critical part of any business, whether small or large. In a budget, one plans how much will be spent on each business operation and when to spend or save. For new small business owners, budgeting is a challenge. It must be prepared correctly.

Here are a few common mistakes observed in budgets of small and new businesses and tips to avoid them for the speedy growth of a business.

Mistake: 1- Lack of a business plan and strategy:

New small business owners often don’t have past experience of budgeting and running a business. They make the budget without a strategy and business plan. Small and long-term financial plans are the crucial part of a budget, but new small business owners are eager to jump into their start-up without a detailed business plan and goals.

How to avoid?

Take advice from an experienced entrepreneur or a seasoned businessperson. Detailed homework should be done on budgeting. Goals and long and short-term financial plans should be defined. Insert all of these plans into the budget. Once started, this business plan should be reviewed periodically. By a review, you can analyze the validity of strategy and can make necessary adjustments if needed.

Mistake:2  Underpricing:

Once a new small business owner enters the market, they find it suitable to sell their product or service at a price less than that of the competitors. This strategy is adopted to attract customers. But in fact, you are losing your money. Less is the profit margin, more is the loss. To compensate this loss, sometimes they lower the operating expenses by producing a low quality product. The customer is not likely to purchase it. Again, you are in loss.

How to avoid it?

To compete in the market,  don’t reduce the sale price because your revenue will be less than the expenses. Neither lower the quality. Just sell the quality product at a suitable price and let the customer know the value of your product. The customer themselves make the comparison of the products and decide where to buy from.

Mistake: 3- Over spending:

The initial few years of startups are very crucial for business success. The mistake often seen is that new small business owners start spending excessively as soon as revenues start receiving. The most common budgeting mistake is that they overspend on advertising. A common assumption about advertising is that it will immediately enhance sales. In fact, at least a quarter is needed to see the impact of advertising on sales. Overestimation of revenue leads to the budget deficit.

How to avoid?

In the initial stage of small business, each penny should be saved and spent with great care. Advertising costs should be logically budgeted without considering an immediate return of the revenue.  Overspending affects budgeting a lot. Keep the operating costs low and capital should be increased.

Mistake: 4- Underestimating uncle SAM

Every business has to pay a heavy amount to the Government in the form of taxes. If you underestimate the amount of taxes you are liable to pay, it will badly affect the budget.

How to avoid?

To avoid underestimation of taxes, don’t consider the end of the day balance. This balance does not show the exact value of employees’ withholdings and revenues. Make a proper estimation of taxes.

Mistake 5: Lack of management

A small business owner has a busy schedule. They have to do many tasks alone. They may fail to manage and organize their business cycle at an optimum level. This disorganization can lead to extra expenses and less profit margin.

How to avoid?

Use software for managing the business properly. This software is used for bookkeeping, accounting, and generating payroll. Your time is saved which can be used to grow the business.

Conclusion:

Budgeting mistakes can be avoided by following the above-mentioned plans. A proper budget is key to business success. 


Check out America's Best Bookkeepers

About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual accounting, providing services to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks file and critical financial documents in an efficient and secure environment. Complete Controller’s team of  US based accounting professionals are certified QuickBooksTMProAdvisor’s providing bookkeeping and controller services including training, full or partial-service bookkeeping, cash-flow management, budgeting and forecasting, vendor and receivables management, process and controls advisement, and customized reporting. Offering flat rate pricing, Complete Controller is the most cost effective expert accounting solution for business, family office, trusts, and households of any size or complexity.