Did you know the average New Year’s resolution only lasts 6 days? Many resolutions don’t even last that long but there are many resolutions truly worth keeping this new year. One of those resolutions to keep is “living within a budget” and using your budget to plan your future.

I say “living” because using a budget really is a habit you choose. It’s almost like you are determining your culture because you determine where your money goes and how it’s spent when you’re on a budget. That isn’t how things happen for 90% of the people you know (it may be why many of them are broke).

Creating a budget you can live by can be done with a pencil and paper if you want. But if you’d like to take it up a notch and not only know where your cash is going, but PLAN for it is to use a budgeting software and the BEST budgeting tool in my opinion is YNAB (You Need A Budget).

Why do I believe YNAB is the BEST home budgeting software?

YNAB helps you:

• Stop Living Paycheck to Paycheck
• Get Out of Debt
• Save More Money Faster

YNAB is not only different, it’s BETTER!

With YNAB, You Give Every Dollar a Job

Each month you assign your available dollars to spending/savings categories. This process takes 20 minutes and revolutionizes the way you think about your money. You control your money, not the other way around. Your spending can then align with your core values.

YNAB – You Need A Budget – it’s the best and you can try it for FREE!

With YNAB, You Save for a Rainy Day

You’ll anticipate larger, less-frequent expenses and will be ready for them without even having to think about it. Insurance premium due in six months for $600? YNAB’s software helps you save $100 each month while you watch the car insurance category of your budget balance grow. Then when the bill comes due, you’re not in a bind … again. When you save for a rainy day, you eliminate the crazy ups and downs in your financial life and gain a true picture of your discretionary income. Enjoy opening the mail again (the money will be there waiting to pay that bill).

With YNAB, You Roll with the Punches

The key is to keep moving even when you fail (you will). YNAB will make small adjustments when you overspend, ensuring that you fix those mistakes before you go to the next month. As a result, you stay on your budgeting feet, so when you DO fail, you don’t quit. You start each month with a clean slate – a huge psychological boost.

With YNAB, You Stop Living Paycheck to Paycheck

Isn’t that what you want a budget to do? YNAB was designed so that you gradually begin living on last month’s income. It’s designed into both the software and methodology to help you do just that. You’ll automatically find the coveted “breathing room” in your finances. You’ll stop trying to time when bills are due based on when you get paid, and if you’re on a variable income, your budgeting “problem” will be eliminated.

YNAB really IS different

YNAB bills itself as different than other budget or money management programs and the reasons are many:

1. They don’t demand your banking passwords or logins. YOU retain control of those so you don’t have to worry with identity theft with your budgeting software.
2. They use the highly reliable online envelope system with some creative twists.
3. This budgeting system helps you save for those “rainy days” and large purchases – including insurance or taxes.
4. YNAB forces you to focus on your budgeting leaks … and fix them quickly.
5. The software makes adjustments if you overspend, helping you correct those mistakes before you go to the next month.
6. It even works for those “spontaneous people!”
7. The system frees you from the paperwork monster (my personal favorite).

Give YNAB a try with a FREE TRIAL!

YNAB will give you 34 days to try out the software and see if you like it. If you don’t, no problem, but I feel confident you’ll find YNAB to be the best software around to help you get your money under control.

Check out the best budgeting software on the Internet! YNAB – You Need A Budget

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

I recently read about a CareerBuilder survey where 42 percent of Americans admit living paycheck to paycheck with around 21 percent admitting to paying late or missing at least one bill payment in the last year. Of those earning over six figures, six percent find themselves in the same boat – living paycheck to paycheck just to make ends meet – and many admit that they don’t make it without credit of some sort.

Living paycheck to paycheck is not a life

I know. I’ve lived that way before myself. It stinks. Paycheck to paycheck living is a recipe for financial disaster, lost sleep, strained marriages, and stress.

Breaking the paycheck to paycheck cycle

I broke MY personal paycheck to paycheck cycle by doing two things:

• I found a better paying job
• I drastically reduced my expenses through budgeting the YNAB way

I may not be able to help you find that better job (though you should read The Inner View of Your Interview) but when it comes to reducing expenses by budgeting, I have a lot of experience in that arena.

The YNAB budget is the best way to budget

YNAB is short for You Need A Budget and it’s by far the best way to gain control of your finances. No, it isn’t designed to help you track your investments, nor is it for handling multiple IRA’s or your secret offshore bank account. What it IS going to help you do is break the paycheck to paycheck death spiral that chokes the life out of you. And they have an iPhone app! Sweet!

YNAB will help you BREAK the paycheck to paycheck cycle. Click HERE for more information.

What YNAB will help you do is prioritize. It will help you decide between things that are important to you and things that aren’t. It’s always funny to me how things that  aren’t important to me have a way of rearing up and DEMANDING attention … and dollars.

Why YNAB?

The philosophy behind this award winning software is why it’s better than any other and that philosophy can be summed up in their 4 Rules of Budgeting:

1. Stop living paycheck to paycheck. You’ll be blown away by how their system eliminates “paycheck-to-paycheck” from your vocabulary and your life. I’ve never seen anything quite like it.

2. Giver every dollar a job. This is what’s referred to as “zero based budgeting” and it turns the traditional budgeting method on it’s head — completely upside down. Zero based budgeting traditionally is time-consuming and exhaustive but NOT with YNAB. The software does all the work.

3. Prepare for the rain. You know the day is coming when you’re going to need a lot of cash to cover an emergency, a semi-annual insurance premium, or new tires for the car, so YNAB helps you prepare for those events.

4. Roll with the punches. Even with the most sophisticated and thorough planning, you can overspend in a category, so YNAB spreads that overage across the next month’s budget where it can be absorbed more readily. YNAB designed their system with a buffer to help you cover accidental overspending.

That last rule, “Roll with the punches,” is what really motivates so many people to use YNAB.Budgets aren’t meant to be written in stone. Sometimes you DO have family drop in from out of town, sometimes you DO need to buy a new pair of work shoes, sometimes you DO have to fly out of town to a funeral. Surprises happen, and when they do, most people who are already struggling to live within a budget just give up, or fall woefully behind. YNAB helps you get over those challenges in an intuitive, simple, and effective way.

YNAB doesn’t encourage you to give up saving for an emergency fund. No, you still fund your savings for emergencies and at the same time, all those little leaks that previously went unnoticed are plainly visible. Money you know about can be re-captured – and that is the beauty of YNAB.

Convinced a budget is what you need? Check out YNAB! Click HERE!

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

Before you begin shopping for a home (or a mortgage), it’s vital to evaluate your personal financial situation, how much debt you carry, how much money you make, how much you spend, and how much you pay out in living and lifestyle expenses each month. To do a complete evaluation:

1. Analyze your personal financial situation.
2. Determine your maximum mortgage amount.
3. Review your credit score.
4. Gather and organize the information lenders will require.

Today, we will focus on the first part of a typical mortgage lender’s evaluation:

Analyze your personal financial situation

Lenders analyze and evaluate your overall financial situation – not just one factor (such as your credit score). Lenders will look at four main aspects of your personal finances:

Income

The money (or its equivalent) that you receive each month including earned income from work, passive income from your investments, and/or alimony, though you aren’t always required to list alimony. The question is: do you have enough income to cover your mortgage payments and all of your other expenses?

Debts

ALL debts, including credit card bills, medical bills, car loans, personal loans from friends, family, or other individuals, tax liens, as well as any other existing mortgages. Lenders are very concerned if a potential borrower has a debt to income ratio over 40 percent. Most prefer a ratio below 35 percent. Your debt to income ratio is calculated by dividing your monthly debt payments by your monthly pre-tax income and multiplying by 100. For example, with a monthly income of $4,000 and debt payments totaling $1,000, you would have a debt to income ratio of 25 percent … well within the range most lenders prefer.

Assets

Anything of value you own, including cars, homes, land, precious metals, stocks, bonds, receivables, and other investments. Lenders aren’t too keen on using things like furniture, furs, and jewelry in their calculations since these items are sometimes difficult to convert to cash at their appraised value (watched Pawn Stars lately?). If lenders are wary of your debt to income ratio, they may consider whether your existing assets overshadow their concern about lending you the money for a mortgage. For example, if you have a lot of liquid assets — cash or other assets that can easily and quickly be converted to cash, such as stocks and bonds — lenders may be willing to loan you money even if your debt to income ratio doesn’t meet their normal criteria.

Expenses

Other expenditures you pay monthly in addition to your debts. These expenses include utilities, car insurance, alimony, and medical, transportation, and entertainment expenses. If lenders find that your monthly income doesn’t cover your expenses, they’ll likely refuse to offer you a loan unless you have very significant liquid assets.

Quicken Loans is the Internet’s #1 mortgage lender. Find out why! Click HERE!

Create a monthly budget worksheet

By creating a monthly budgeting worksheet, you’ll see an inventory of all of your monthly income and expenses. It may help you understand what mortgage lenders see and allow you to make some adjustments in preparation for getting your mortgage. Creating a personalized monthly budgeting worksheet will also help you:

• Understand how much money you have left over each month for your mortgage and other bills that might result from buying a home.
• Organize all the documents and information you and your lender may need in order to evaluate your financial situation.

To create your own budgeting worksheet, download and use this template (Microsoft Excel format) FREE from The Wisdom Journal at: http://www.thewisdomjournal.com/Blog/go/Budget_Worksheet.xls

Once you have your personal budgeting worksheet filled in, you can more easily anticipate where lenders might find concerns with your financial situation and then fix those problems before applying for your mortgage.

For example, if your expenses exceed your income just slightly, you might be able to cut back on all but your most essential expenses, thereby making your situation more appealing to a lender. Lenders LOVE to see borrowers that put aside money each month in a savings account (it’s another asset in your favor). They also love to deal with borrowers that have an emergency fund. Bear in mind however, that though you might be able to make these changes right away, you’ll need to keep them up since most lenders want to see a trend of improving financial history over more than just a few months in order to feel comfortable approving you for a loan.

How are your finances?

Are you in fiscal shape, ready, willing, and able to make sustained, consistent, timely payments on a mortgage loan? If the answer is yes, congratulations! Stay tuned to check out the next installment of Are You Ready For A Mortgage?

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

Okay, you did your job: You child is no longer a child. She’s grown up, has one of those “getting started” jobs, has a car that you mostly paid for, has a cell phone that you mostly pay for, and is heading off to a college … that you’ll mostly pay for. She needs a budget (and you do too!).

YNAB is probably your best bet for getting a college student prepped for her financial life as an adult, but you don’t have to buy award winning software to create a budget. You CAN use the ancient technique of pencil and paper. Yes, it still works.

Buy-in is critical for a college student on a budget

The most important aspect of creating a budget with another person is their buy-in with the whole process. NOT getting buy-in is a huge mistake. Buy-in insures communication and assures your student that you’re open to modification is expenses exceed your expectations.

Flexibility with a budget is vital

What’s next? Flexibility. This is her freshman year and she won’t know what to expect … she CAN’T know what to expect, and most likely, neither can you. Setting strict, inflexible limits on her grocery bill or entertainment expenses just isn’t feasible. You can set reasonable limits on her total amount of spending, however, and that’s probably the best way to proceed. Studies show that people are generally pretty good at keeping things in line financially when faced with a year’s expenses, but not so good at estimating what they’ll need next week! You probably should expect your student to be any different.

Where will your college student get her income?

To begin, you’ll need to know how much is at her disposal each month. Will you contribute as a parent? Start with YOUR budget first, then add in any scholarship or grant money that she expects to receive over an above her tuition, books (hint: try College Book Renter), fees, supplies, room and board. Be sure to include any of her accumulated savings as well as any earnings she will receive from a work-study or part-time job. That gives you a general framework for your college bound student’s budget.

Fixed and variable expenses

Next, you’ll need to get a handle on her fixed expenses such as car insurance, cell phone, off-campus rent, etc. Then we get to the variable expenses such as clothing, food (outside the meal plan), transportation, and “fun.” This is the tricky part of your calculation. Remember what it was like when YOU were in college?

Ask for budgeting help from the college

Stop by the schools financial aid office and ask if they can provide a sample budget for new students. Even if they don’t have one, they probably have a list of common expenses to help you formulate a spending plan.

Once you have your annual numbers, you’ll need to break it down into months and if she’s comfortable with it, into weeks. It’s a smart idea to get it down to the weeks calculation because if she gets ahead of herself and overspends one week, she’ll know to make adjustments next week to get back on track.

Help her learn money management, not just budgeting

One way to force her to budget properly is to keep her monies in an online savings account at a bank that also has checking (ING Direct Checking or Everbank Checking). This way you can set up periodic transfers from savings to checking. She will earn a little interest and will learn to make wise use of her money!

If … or when … she makes a bad money decision

One final note: if she blows it, dipping into her savings account to buy her new boyfriend the electric guitar of his dreams or to take her “bestie” on a road trip to the beach for Spring Break, DON’T bail her out. If you do, I will personally guarantee that she will do it again next semester, and the one after that. A better bet is to have regular budget meetings over the phone with her to insure she stays on track and learns money management. I would also recommend checking her online bank accounts to make certain that what she tells you matches reality.

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.

Today’s post is by contributor, Tom Walker, writer and product reviewer with CartridgeSave.co.uk, an online store selling printer ink cartridges.

Operating a business without a written budget is comparable to building a house without a blueprint. Even the least experienced business owner can draft a meaningful business budget that will become a useful financial guide throughout the fiscal year. Budgeting does not have to be difficult or dreaded, but instead can be embraced as a planning exercise for anticipated growth and new business ventures. Embrace these tips to draft a budget and gain control over business expenditures.

Drafting your business budget has two key components:

• Gathering the information you need to write it
• Using it to control your finances

How to write your business budget

1. Use budget software

Many free online budget programs exist that are useful in learning the practice of establishing a business budget. Some are question-driven and allow for detailed input and then generate a useful spending plan. All amounts must be accurate for the plan to be meaningful against the actual business operation. Research will be required to find the information needed by the program.

2. Calculate operating expenses

There are basic percentages used to construct a budget when the business has no actual financial history to use for reference. Employee expenses, facility costs, and utility use can be estimated as a certain percentage of the overall budget based on the industry standard. Accountants will often compute these percentages and raise concern if any one of these major categories strays from the norm.

3. Refer to checking account statements

Bank statements are very useful tools for examining every purchase and expenditure. Budget amounts can be constructed from previous months and years of business. Create a spreadsheet that shows actual monthly expenditures and build a monthly budget. Annual budget amounts are only guidelines that must be broken down into month-by-month operating limits.

4. Estimate income

Nearly every business experiences seasonal lulls, so income should be estimated on a monthly basis. When income wanes in the same month that expenditures rise, some savings must exist for the company to continue to operate. Income estimates will place visual emphasis on the months that will require special consideration.

5. Evaluate equipment

During the budget exercise every year, all equipment must be evaluated for possible replacement. Vehicles, computer equipment, and all equipment used by employees are essential to revenue generation. Budget amounts for repair and replacement will reduce the risk of unanticipated capital expenditures. Any request for new equipment should be documented with prices and associated expense estimates.

6. Assess existing inventory

Companies have sales inventory, supply inventory, or office supplies that remain on the shelves throughout the year. When cash flow is consistent, too much inventory does not challenge the operation. Close evaluation of every type of inventory will reveal stagnant sales inventory that must be sold to redeem the cash. Supplies allowed to expire are a direct waste of money. Every inventory must be managed at the lowest possible level without impeding the operation.

Control business finances

Operating the business within budget can become a way of life if some simple guidelines are implemented soon after the budget is written.

7. Include employees in cost reduction efforts

Employees will participate when rewards are implemented for their creative contributions to reducing costs. If a business owner can spend $50 on a gift certificate for an idea that saves $1000, he would be wise to do so. All employees enjoy being recognized and included in the improvement of the workplace.

8. Consider selling unused assets

When the equipment review is performed, list all assets that are not utilized and consider selling them to another business. If a loan exists on the asset, selling the piece of equipment will also eliminate the monthly loan payment. Even selling a piece of heavy equipment for the scrap metal is better than having a hazard sitting on the property.

9. Combine employee roles

Employees who resign should not be immediately replaced unless the role is unique within the business and generates revenue. Create opportunity for existing employees by asking for internal applications to fill the role or combining the vacant role with another role. Reevaluate salary and compensation to retain the best employees and operate with fewer people.

10. Conduct monthly budget reviews

At some point within every 30-day period, conduct a formal budget review against the actual expenditures in the previous month. Look at the coming 90-day period and anticipate anywhere that expenses are going to overwhelm income in the same month. Make adjustments to cover any surprise expenditures and keep good notes for the next annual budget exercise.

Whether the business is just starting out or has been around for years, the basic budgeting process is the same. Just as the blueprint is the guide for building a house, the budget is a guide for financial decisions throughout the year. Creativity is important when addressing needs in lean times. Many business challenges can be addressed without spending money. As revenue increases, maintaining a budget is even more important to control expenditures and grow the business.

Links to products or services may be affiliate links. See my disclosure policy on the site or on my About page.