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Three buckets with coins and one with banknotes
As you know, it is important to save money to prepare for unexpected bills and circumstances. It is highly crucial that you organize your savings and expenditures. According to the CFPB, also known as the Consumer Financial Protection Bureau, people who succeed at saving money maintain savings buckets as an effective saving method. You can have as many buckets as you’d like. Typically, the four most common savings buckets are:

  1. Regular Expenses – Recurring expenses such as quarterly, monthly, or annually bills
  2. Unexpected Expenses – Expenses that do not occur often but you will inevitably have to pay such as car or house maintenance
  3. Emergency Fund – For unforeseen circumstances such as a medical emergency or loss of a job
  4. Financial Goals – For achievement of lifetime goals and dreams such as retiring early or going back to school

According to the CFPB, if you are not covering these four buckets, you are not saving enough for any unpleasant or unexpected events.

Regular Expenses

It is much easier to cover your recurring monthly expenses when you have a good source of income such as paying your utility bills, transportation expenses, or groceries. However, it is understandable that, even after earning your paychecks, you are not able to have any collective savings. This scenario can be frustrating when you are not able to take out extra cash for a holiday trip, birthday celebration, or a little extra shopping. This is a clear sign that you are not saving enough every month. The budget that you create should always account for monthly expenses. If you are earning a good pay check and are still unable to pay for your regular expenses, something is wrong.  Either your monthly expenses are exceeding your income or you are spending too much on the extra stuff. Therefore, it is always best that you account for your recurring expenses and save every month prior to spending on anything else.

Unexpected Expenses

There are so many unexpected bills that can occur at any time. Therefore, you need to have a separate savings account for all of the unexpected expenses. Out of the blue, your car can decide to break down at the end of the month. Perhaps it needs a new clutch or belt. A car is a necessity for your daily traveling needs and you need to immediately fix this issue. One should have a separate savings bucket for these unforeseen events. You should consider opening an “irregular expense fund” within your savings buckets that you can contribute to on a monthly basis to recover such repair costs and other maintenance costs such as these.

Emergency Fund

The most important of all savings is an emergency fund or emergency savings bucket. Losing a job or facing an unexpected medical expense can be a daunting experience as your list of monthly expenses is right in front of you. At that point in time, you wonder if your savings is enough to support your current lifestyle unless you find any better opportunity. However, if you have already set an emergency savings fund, you will have income set aside to support your loss for the time being. According to financial industry experts, a person’s savings should cover at least 3 months of their basic expenses. Hence, consider creating an emergency savings bucket that will benefit you in an uncertain situation. You can even open a separate savings account with your bank in which you can make monthly payments to considering the account as your monthly liability.

Financial Goals

We all strive to achieve our life goals and dreams. All of these achievements not only require time, but they also need money. It is best that you create your financial goals for every age in mind such as your mid-30 goals and retirement years. The consumer financial protection bureau states that a person should separate their earnings to pursue their life goals, even that dream vacation you’ve always hoped for.

Conclusion

By creating these savings buckets for bookkeeping purposes, you will not only have enough income but you will even be able to track and monitor your spending criteria.  The savings buckets will allow you to have peace of mind in terms of monetary pressures as you know you have money saved in your accounts for all of your needs,  planned and unplanned.

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.

 

Spend or Save - Complete Controller

Money can be a difficult thing to deal with, especially if you are an impulse buyer. Those who make impulse purchases can relate to the dilemma of figuring out what to spend and what to save. Impulse buying is frequent among individuals who are looking to satisfy their wants beyond just basic needs. Segregating the two and identifying when to spend on luxuries has become essential to survive recent times when money is continuously losing value. Here, a few crucial tips regarding what to spend and what to save as part of your bookkeeping process will be identified. Check out America's Best Bookkeepers

  1. Set Priorities

The first and foremost step is to set your priorities right. Here, priorities refer to choosing what you need over what you’d be interested in buying for luxury spending. For instance, a top priority could be spending money on basic needs, such as food and clothing. Remember, food and clothing can fall into the categories of either basic and luxury. Moreover, it is always a good idea to pay your bills first and then decide on your expenditures for the month. Here is a systematic way to go about doing it: pay your bills, spend on basic needs, spend on what you can’t live without, keep some money away for savings, and whatever you are left with can then be used for luxury spending of any sort. Make sure to follow this order religiously, and you will not run out of cash as and when required.

  1. Keep an Emergency Fund Check out America's Best Bookkeepers

It is essential to keep an emergency fund where you can stack up all of your savings for times when you do run out of cash. This fund is something you may fall back on in times of a job loss, insufficient money to fulfill basic needs, medical conditions where you need to purchase the necessary medications. It can also be used during the last few days of the month when essentially every one of us is out of cash for that special take-out extra pepperoni pizza on a cheat day.

  1. Don’t Listen to your impulse

Conquer the struggle of what to spend and what to save by avoiding impulse buying. We often tend to pick up items while grocery shopping that is too fancy and inviting or, in other cases, we are just attracted to it purely because of a promotion going onto it. The overwhelming excitement of a product wears off eventually, and then you see no point in making such a purchase. Hence, it is better to stick only to the grocery list items and not deviate from them, unless necessary. Caution! Necessary here doesn’t equate your impulse.

  1. Be Resourceful Check out America's Best Bookkeepers

Here, you are being asked to save a little, and how so? Let’s identify a few ways how you may be able to save a few bucks from your routine expenditures.

  • Try to use discounts and loyalty cards in avenues that offer similar options.
  • Buy your monthly/weekly snacks when you plan your routine grocery visit. Do not buy snacks every day.
  • Once every three months, plan a garage sale. You can get rid of those impulse buys this way.
  • Try to opt for generic but healthy items rather than overspending on brands. 
  • If you want books, use the nearest library rather than buying them.
  • Use the internet for essentials such as watching movies, listening to music, and binge-watching your favorite series rather than going out and spending a lot on entertainment.
  1. Make a Budget and Follow it

Lastly, another useful tip has to do with drawing up a realistic budget and sticking to it. A budget will enable you to list your monthly expenses and income. Simultaneously, you may also draw up a list of your needs and wants. Once the allocation is complete on each of the needed items, you will have an estimate of how much money you are left with to satisfy your wants. However, this extra money must not be entirely spent on that particular want. A portion of it must go into the emergency fund and savings under all circumstances.

Conclusion

These five tips can help you through the struggle of what to spend and what to save without much hassle. Stick to these, and you are good to go!

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
Methods to Save - Complete Controller

There is no hidden secret to getting rich. The theory is quite simple; spend less, earn/save more, and invest wisely! But, practically speaking, it is harder than it sounds. Spending less and saving more is no easy feat. You have to cut your extras to have a financially secure and stable life. Most individuals and families indeed kick-start their New Year to save more and spend less, but they usually end up saving no money at all. They fail to manage their money-related tasks because they don’t plan and budget their monthly paychecks properly. Check out America's Best Bookkeepers

Proper Planning and Financial Budgeting

How to save money is probably one of the most asked questions. People have predicted answers like budget your paychecks, spend less, save more, plan wisely, etc. But little do they know, saving money is much more than all of this and has its strategic significance in the financial world. There are several ways by which we can save money and accumulate significant wealth for hard times. To save money, you can make things work in your favor and save a lot for your rainy days.

Set Your Priorities Right

Setting realistic goals and making an effective money-saving plan requires a brilliant amount of willpower and a promising start to save money. However, it is not an impossible job since there are many ways to save and spend less. The major driving force that triggers you to save something for hard times is an unpredictable future and uncertain medical and personal conditions. Check out America's Best Bookkeepers

No Matter What—Save More and Spend Less

Budgeting your paycheck is the safest way that you can save the most out of your monthly salary. To achieve your goals of spending less and saving more, you have to make a comprehensive plan by looking at present and futuristic needs. You can only do this once you know your financial equation’s exact status and how much you can afford to spend in a single month. Making a concrete plan may take a little while before you can implement it properly but, once you find a perfect balance in managing your money, you can save a lot for yourself.

Saving money for meeting financial insecurities is critically vital for securing the future of your family. Here’re how you can save more and spend less.

Record Your Expenses

The first step to saving money is knowing how much you can afford to spend in a single month and how much you need to save and contribute to your savings or retirement account. So, before making a monthly budget plan, you need to record and track your monthly financial transactions—everything from bills to buying coffee or snacks. It would help if you had a clear picture of where your money is coming from and where your money is going. Once you know your spending’s exact status, it will be relatively easier to sketch up a rough plan for the entire month. Check out America's Best Bookkeepers

Make a Budget

Making a budget plan is one of the most challenging parts. However, this doesn’t have to be tough, especially when you get a clear picture of your monthly expenses. It’s been said that ‘making a budget plan is hard and following it strictly is even harder.’ Moreover, a budget plan serves as a blueprint for the entire month that restricts you from buying unnecessary stuff. Proper budgeting and bookkeeping help you a lot to initiate a plan to save money that indeed leads you to save and spend less.

Stop Unnecessary Shopping

Cutting your extras, especially in grocery items, will help you save a lot of money. Whatever you save for the month increases your savings account balance, and that is surprisingly awesome for you and your family. This indicates that the more you save, the more stable and secure your life will be! To save and spend less, you have to be very careful and choosy in selecting the right items from the shelves, or you may find it extremely difficult to keep anything for the month.

 

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers
saving or paying off debt - Complete Controller

The vicious debt trap is something that almost all individuals in debt hope to escape. However, each faces the dilemma of deciding whether saving money is a more viable option than paying off debt. The decision to prioritize between these two has remained an immensely debated topic in the financial market’s bookkeeping umbrella. It is essential to be mindful of the various factors that will influence whether either one is a more feasible option – optimizing savings or paying off debt obligations. These factors are in detail in the paragraphs that follow. Check out America's Best Bookkeepers

When is Saving a Better Option?

It is usually a better idea to emphasize more on savings to prepare for unforeseen circumstances. This emphasis is a general belief that leads to individuals deciding to save when they have outstanding debt in their portfolio. However, these vary from person to person. Situations when keeping, instead of paying off debt, is a better option comprise of the following:

  • If the interest rate on loan is low, there is no point in paying off the debt before saving money. The amount that you will use to pay off the debt may instead be saved for use in the future. Lower interest rates may be an excellent indicator to save money now, to be used later, by the principle that dictates that saving is a better option as long as interest earned is higher than the interest paid. Check out America's Best Bookkeepers
  • Another situation when saving for an ’emergency fund’ is a top priority is when you are close to your retirement age. At this particular point in time, saving up for unexpected costs and emergency expenses is appropriate to safeguard for future years. The ongoing source of income is about to end. To ensure a stable life during retirement, saving is a likely option.
  • Another situation that calls for saving rather than paying off debt is when your job allows you to access a retirement savings plan. This plan will automatically boost the savings made to retirement savings account if the employer is likely to match the 401(k) contributions. This contribution is essentially free money.
  • In case of a small amount of outstanding debt, savings may be prioritized. Out of which, a small amount you can dedicate to paying off debt using minimum payments. This minimum is likely to ensure that the small loan amount is paid off and sufficient savings.

When is Paying Off Debt a Better Option?

Despite the need to save enough money to have backup cash available as and when needed, sometimes it is better to pay off debt rather than accentuating on creating savings. The following situations will require prioritizing paying off debt:

  • To improve one’s credit score, paying off debt is a more feasible option. Acquiring a higher credit score is essential to have sufficient credit for use in the future. As a result of a better score, lower interest and insurance rates can be better negotiated for future loans. Check out America's Best Bookkeepers
  • Another reason to pay off debt is the higher than 6% interest rate on loans. With this kind of borrowing cost, it is less risky to settle the debt immediately. No one likes to end up in a situation where the interest paid exceeds the interest earned on savings. Higher interest rates are, thus, an indicator that debt must be paid off, effective immediately.
  • To attract lower interest rates in the future, it is essential to lower the balance owed to any loan amount. Making higher payments initially will result in a lower balance and, thus, a lower interest rate can be obtained in the long run, consequently.

Depending on the situation and one’s objectives, either one of the two options may be a priority. A few can successfully maintain a healthy balance between savings and paying off small amounts of their debt. This debt relief allows them a good credit score/worthiness and enough cash savings to be used in times of future uncertainties. Whether you save money or settle debt, it is your personal preference based primarily on circumstances.

Check out America's Best Bookkeepers About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service 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, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity. Check out America's Best Bookkeepers