But when I paid off my debt and switched my attention to savings, my motivation lagged. It was too easy to come up with other things to do with all those dollars that I should have been virtuously putting away!

From my experience reading personal finance blogs, it appears as though finding the motivation to save money rather than spend it really is pretty hard. If you’re not naturally tightfisted, it might help you to try one of these motivational techniques out.

1) Have a Goal

 
This one is so important that I’m tempted to just repeat it nine more times! One of the nice things about debt payoff is that there’s a clear end in sight, even if it feels far away. When you’re saving, it can feel random and endless.

Set some goals. They may be really big, like “$1 million for retirement,” or medium-sized, like “$10,000 for an emergency fund,” or small, like “$1000 for a week in Hawaii.” Knowing what you’re saving for will encourage you to get excited.

2) Mental Visualization

 
So, you have a goal or six! Choose one of these goals, and spend some time creating a mental image.

Say your savings goal is a down payment for a house. Sit down and spend some real time — at least half an hour — thinking about what that house would look like. How many bedrooms? What location? Is there a garden out front? Then, every morning, take a minute to go back to that mental image. You’ll get a strong urge to reach that goal!

3) The Snowball Technique

 
You’re probably familiar with this idea from debt payoff. Let’s say you have five savings goals, and you plan to contribute $100 a month to each. Let’s further say that one goal will be reached after you’ve saved $300.

After you’ve met that goal, don’t spend the extra $100! Instead, “snowball” it towards your next-largest goal. When you’ve reached that goal, you can direct $200 extra towards the next goal, and so forth. The reason this works as a motivating technique is that you can see yourself moving faster as you reach each new goal.

4) Physical Visualization: The Picture in Your Wallet

 
If mental visualization is too woo-woo for you, try something physical. This is especially good if you’re a credit-card junkie.

Print out a picture to represent your goal, and wrap it around your credit card. Before you spend, look at your savings goal and decide whether it’s really worth it to you.

5) Physical Visualization: The Thermometer on Your Fridge

 
Visuals motivate you to save because they constantly remind you of why you’re doing what you’re doing! You can use a variety of techniques, many of which are also good for paying off debt. For example, if your savings goal is $20,000 for a house down payment, try making a thermometer on a piece of paper and sticking it to your fridge. You’ll see it every day, and feel really motivated to color in each new level.

You can try other creative visualizations in your house. I have a jar of pennies sitting on my shelf; every time I put $100 in my savings account, I add a penny to the jar, and I’ve been enjoying watching it fill up.

6) Virtual Visualization: Online Goal Setting

 
If you have a Mint or a Capital One 360 account, you have access to a “goal-setting” feature. You link your savings account to a specific goal and tell the computer how much you want to have saved, and by when. Then your goal thermometer is automatically updated every day.

The great thing about this is: no cheating! If you take money out of your savings account, you can’t un-color the paper thermometer on your fridge. But the online thermometers will know exactly how much is in your account. They’ll also email you to encourage you when you meet certain benchmarks (I just got one from Cap One 360 when I got to 75% of one of my goals.)

7) Gamify Your Savings

 
Debt payoff was fun for me because I made it into a game: how much could I pay off every month? How fast could I do it, and how little interest could I pay?

You can turn your savings into a game in the same way. Try competing against yourself: can you make this month your best savings month ever? Can you earn an extra $100 specifically to add to your savings? How long can you go without touching your emergency fund? Can you save 10% of your income? 15%? How about 50%????

Also consider starting a challenge to motivate yourself to save a certain amount of money in a certain amount of time.

8) Read Personal Finance Blogs

 
Definitely one of the best money motivators for me is reading other people’s stories in real time. I cheer when they succeed and sympathize when they hit setbacks. But most of all, when they make progress, I think “I want to be like that.”

Since I started reading blogs, I’ve hit all kinds of financial goals I never would have thought to even reach for — from maxing out my Roth IRA to saving a six-month emergency fund. A lot of my motivation came from the knowledge that it was possible to do things like that, because other people were.

9) Reward Yourself

 
Small savings goals have their own rewards: you get to go on the vacation! But large ones, like retirement or home buying, can be marathon slogs. Set some smaller benchmarks along the way, and do something nice for yourself.

Maybe it’s a dinner out when you hit every $10,000 in the account, or maybe it’s a long walk in a favorite place — it doesn’t have to involve spending money! But it should be something that you think of as special, and you should be ready to enjoy every second of it.

10) Tell Your Friends

 
I don’t know about you all, but I find shame to be a pretty powerful motivator! If other people know I’m working on something, I’m way more likely to finish it.

If you’re having trouble getting going on savings, why not tell some friends or family members? Ask them to check in on you and encourage you. If it turns out they’d like to save for a goal too, maybe you can be “buddies” as you start to save. Or maybe you’ll want to compete against each other to see who can save the most in a set period of time. Whatever works for you!

Here are some other posts you might enjoy

• 30 Ways to Save Each Month
• 100 Goals to Focus on for a Successful Year
• 20 Ways to Save Money In Your 20s
• Should You Reward Yourself for Good Financial Habits?
• How to Turn Your Financial Goals Into a Game

 
Do you agree that it’s hard to motivate yourself to save? I’d love to hear some more techniques in the comments!
 

Some ways to save on expenses are the same for grad students and for other thrifty people. Some popular options include:

• Sharing housing — an especially good option if you’ve moved to the area just for a few years of grad school and don’t intend to stay. You can live with other “transient” people both to make friends and save a lot of money.

• Buy very little clothing, and/or buy it at thrift stores. Many grad students don’t need much professional clothing, since they spend most of their time in libraries, labs, and classrooms. I only owned one suit when I was in grad school, and I got it off a “free” rack!

• Cook your own meals/make your own coffee

But there are other ways to save money that are particular to grad students. Here are a few of my favorite tips, in no particular order:

Employer reimbursement

Depending on what you are going to grad school for, you may be able to take advantage of tuition reimbursement. For example, many part-time MBA students are able to take advantage of this perk.

For those who are not familiar with employer tuition reimbursement, there is a tax law that allows employers to provide each employee up to $5,250 in employer tuition reimbursement tax-free each year.

While there are plenty of full-time grad students or students who are in programs where employers are not inclined to pay for them to get their masters, if tuition reimbursement is offered to you by all means take advantage of it. If you can stretch the reimbursement over six fiscal years you will save in excess of $31 thousand dollars.

DC wrote an entire post on how to take full advantage of employer tuition reimbursement.

Student Discounts

An oldie, but goodie! I was a grad student in New York and one year I saw every single program the New York City Ballet did, because I could get a ticket for $12 as a student, which was literally cheaper than a movie.

You can get student discounts at arts organizations, restaurants, and even dry cleaners. Often, in your university’s neighborhood, other kinds of businesses will post discounts aimed specifically at students of that university.

If a business doesn’t have something explicitly posted, just ask. You never know.

Travel Funds

Your department or central graduate school administration may make travel money available for conferences and/or research. Talking to older students is often the best way to find out what hidden pools of money may be available, on top of what is advertised by the school. If you work closely with a professor (say, as a research assistant) that person may have some professional development money they can share with you, as well.

Travel funds are great for the obvious reason: you need to go to the conference or research site anyway, so you can save money by not paying for it yourself! But they’re also great for taking a cheap vacation. I did this many times: the university paid for my plane ticket, and I paid for my own lodging after the conference was over so that I could have a few extra days to see the area.

Professional Association Funds

Depending on what you’re in grad school for, you may be able to join one or more professional associations. This costs something up front, for annual dues, but those are usually steeply discounted for students. And importantly, they can give you access to another pool of money you can use for research or travel.

These funds are more competitive than the ones given out by your school, because grad students from all over can apply for them, but they can be really useful. I once got $1500 in conference travel money in exchange for writing a short essay for my professional association.

Use University Facilities

Your university probably has:

• A student health center
• Free wifi
• Free or inexpensive printing
• A gym you can join at a steep discount
• Movies, plays, and/or musical events on campus

Even if you don’t have the university’s health insurance plan, you can probably still use the student health center for very little money. They won’t be able to do emergency or specialist care, but you can get basic exams, women’s health care, help with routine illnesses like the flu, vaccines, etc.

You can also join the university’s gym. Sometimes this is actually free for grad students, but if it’s not, it’ll still be much cheaper than any commercial gym membership. You do need to watch out for restrictions on your ability to use certain facilities at certain times — often the swimming pool is off limits several hours a day for the use of the swim team, for example.

Finally, think about what else you can do on campus. I didn’t pay for the internet at my apartment for several years, for example; I lived close enough that I could walk to the library every day. I was actually more productive at home without being able to surf, too! And I took advantage of inexpensive entertainment on campus, where there are often concerts, art exhibits, plays, and classic movies.

Here are some of our other posts you may be interested in:

• 12 Tips for Beginner Couponers
• How to Organize Coupons Using a Database in Excel
• One Strategy That Immediately Limits Spending

Have you been a grad student, or are you one now? Are there other university facilities you use to make life a little less expensive?

Stop beating yourself up about this. It’s a real psychological problem: humans have a hard time setting aside for the future what could be used right now.

But in our society, we don’t have much of a choice. Whether it’s for retirement, for emergencies like job loss or car repairs, for travel, for some other big goal like education or a down payment, we need to save.

Enter a new set of apps that tries to make saving almost literally friction-free by setting up small automatic transactions, so that you end up saving without ever thinking about it.

Digit

One of the best-known of these apps is Digit. Digit is a “smart” app — you link your checking account to it, and it analyzes your spending patterns and withdraws a few dollars every now and then that it thinks you won’t “need” to use. The money then goes to a savings account.

Digit guarantees that you won’t overdraft, and your money will be FDIC-insured up to $250,000. You can withdraw your deposits at any time. The catch? You won’t get interest on your savings, since Digit covers its own expenses by using the interest on deposits. But if you have trouble saving, it might be worth it.

Qapital

Like Digit, Qapital automatically withdraws small amounts of money from your checking account and puts them in an FDIC-insured savings account. But if you find Digit’s random amounts more maddening than charming, Qapital offers you a higher level of control.

When you set up an account, the app asks you to also set up “rules.” For example, the “round-up” rule lets you round up any credit card purchases or other transactions to the nearest $1 or $2. The app keeps track of your purchases, and twice a week withdraws the rounded-up money (this is so you don’t have 20 withdrawals of $.15 or so every week — instead you get two withdrawals of $3.53 or whatever amount it is.)

Qapital offers a variety of other rules that you can tweak for various levels of automatic savings. The app requires more up-front thought than Digit does, but if you’re a control freak you might like it better.

Acorns

Unlike the previous two, Acorns is a “micro-investing” app, not a “micro-savings” app. Like Digit, it’s a zero-thought setup; like Qapital, it focuses on rounding up your purchases. For a $1/month fee, it simply withdraws the “spare change” from your checking account and invests it in an automatic, diversified portfolio.

Using Acorns instead of one of the savings apps comes with the usual tradeoff: more risk in the market, but also more potential for reward. If you’re curious about investing, though, it could be a fun way to get your feet wet.

Your Bank’s App

If you have a conventional checking/savings account, you can almost certainly set up a monthly automatic withdrawal for any amount from $1 on up.

The upsides: you get to keep any interest you earn, and there are no risks.

The downsides: it’s not as much fun as the “round-up” rules and randomness of the other apps; your money is even easier to access, so you might be more tempted to spend it.

Watch for Newcomers…but Be Careful!

Automatic savings apps are a powerful idea and I expect there will be many variations in the future that will be attractive, so keep an eye out…but like always, be cautious.

When I was researching this post, I ran across VaPay, which apparently grew out of an idea to help people save for vacations with small amounts (hence “Va.”) Like Qapital, it claims to round up transactions and move the “spare change” automatically to a savings account, only it works by rounding up debit, not credit, transactions.

I thought it might be an interesting option for those who use debit cards. However, there were three red flags:

1. I couldn’t find information on their site on whether or not the accounts were FDIC-insured.
2. Their fee schedule seems high to me compared to the others.
3. When I searched the company, I didn’t find reviews by bloggers or others who’d used the app.

I wrote the company about the FDIC insurance and never heard back. So my conclusion was that they are not a safe company to deal with. Be sure to do your research before trusting your login information and cash to an app!

When I finally started to turn my financial life around at age 35, the very first thing I did was to open an IRA. And two years later, it’s a choice I haven’t once regretted.

IRAs have a lot of benefits:

• They are “tax-advantaged” in one of two ways: you can either pay taxes now on the money you put into them (a “Roth IRA”) but then withdraw all contributions and growth tax-free later; or you can reduce your taxable income now but pay taxes on withdrawals later (“Traditional IRA.”)

• In other words, having an IRA helps you plan for your taxes either now or in the future.

• Unlike a 401(k), you do not need your employer to offer or manage this kind of account. You can open one directly (see below) and maintain control over it yourself.

• You can even contribute to an IRA if you’re not employed full-time or if you’re under 18. When my friend earned her first paycheck as a high school student, her mom wouldn’t let her spend it — instead she had to put it into an IRA. Trust me, she’s grateful now!

• You can open an IRA with a very small investment if you commit to monthly automatic contributions — as little as $0!

• They can be lower-fee than 401(k)s — when you’re all set up, you can use a service like FeeX to check on fees you might not know about.

If you are ready to open an IRA, you have many options.

Just like with choosing a bank, you will want to research each company’s service options, fees, account minimums, and procedures.

Some accounts will be great for those who have a big chunk of money to invest, and others for those who need to start with small monthly contributions. Some accounts charge a larger management fee in return for extra services, and some are low-fee and bare-bones.

There are many more options out there, but here are five of the best types of accounts for beginners:

1) Low Management Fees: Vanguard and Fidelity

Vanguard and Scottrade are classic choices that offer some of the lowest management fees out there for their index funds — Vanguard invented that concept, in fact. Both let you purchase a wide selection of funds with no transaction fee once you’ve opened your IRA.

Vanguard does have a $1,000 minimum on some of its funds and a $3,000 minimum on others, while Fidelity mostly requests a $2,500 minimum though it will waive that minimum with auto-deposits of $200 a month. These are both really good options if you are starting off with some money to invest and feel confident that low-cost index funds are right for you.

2) Robo-Advisors

Betterment and Wealthfront are investment upstarts. Both charge a small annual management fee (currently 0.15%-.035% depending on which service and how much you have to invest) on top of the fund fees — so you will pay more than you will at Vanguard, say, but less than you would with most traditional hands-on financial advisors.

In return, both services will ask you questions about your goals and risk tolerances and recommend a portfolio for you. Each offers other services as well: rebalancing, tax-loss harvesting, and sometimes more personalized advice. Betterment has no account minimum, and Wealthfront has a $500 minimum.

3) Traditional Brokers

If you want to set up your IRA in person and have a financial advisor of your own, you will probably want an account with a traditional broker. Charles Schwab and TD Ameritrade are two well-regarded firms that have physical offices in many parts of the country and 24/7 phone support, as well as strong customer service records.

As of 2016 they each charge slightly under $10 in trade commissions, and offer a variety of low-cost mutual funds. Ameritrade has no account minimum, and Charles Schwab’s $1,000 minimum can be waived if you set up auto-deposits of $100/month.

4) Active Trading

The majority of IRA owners — especially beginners — should not be looking to actively trade themselves. However, if you have more experience you may want to trade yourself with at least some of your IRA portfolio, and in that case a platform like TradeKing is a good choice.

TradeKing has no account minimum and charges $4.95 per trade in commissions. There is also a $50 annual fee if you don’t maintain an account balance of $2,500 or make at least one trade per year — but if you are opening an account there, this is unlikely to be a problem!

Keep in mind that you don’t have to actively trade with an account like TradeKing. You can simply choose low-fee mutual funds and let your investments compound over time.

5) With a CD at a Bank

If you’re concerned about putting all of your retirement funds into the stock and/or bond markets, you might consider keeping some in a Certificate of Deposit.

Discover Bank, among others, lets you open an IRA and buy a CD, which will earn more interest than a traditional savings account while giving you the tax advantage of an IRA. If you’re a little older or more conservative this could be a good option for part, though not all, of your retirement funds.

 
Where do you have IRA or retirement accounts? Any great options I missed?
 

Instead of staying at a hotel or a classic B&B, the theory goes, you can pay a lesser amount and meet actual residents of the place you’re traveling to. Meanwhile, the person you’re renting from picks up a little extra income and also gets to meet some new people. Win-win!

It’s a classic way to balance travel with money goals.

Of course, it’s not necessarily as clear cut as that; it’s important to know that legal and safety concerns have been raised about AirBnB, although also important to know that millions of people have used it without issues. You should read up on both the company’s website and on news articles before you decide what you think.

If you’re not comfortable, you can always get some free hotels using our recommended travel rewards credit cards instead.

However, this post is going to assume that you’ve done that already and decided that you do want to use AirBnB. It’ll give you some tips on what to expect the first time you book a stay and use the service.
 

1) Search for a room

Searching for Bookings in Paris in June

The first thing you’ll do on AirBnB, after creating an account, is to search for a particular city and set of dates, along with how many guests there will be (1 all the way up to 16+, in case you’re bringing your whole wedding party!)

At this point, you can refine your search. You can focus in on one area of the map if you know you want to be in a certain area. You can refine by price. And you can also refine by type of room.

Some AirBnB Options in Paris

1a) Type of Room is Very Important!!!!!

 
In a traditional hotel, you expect a minimum of an absolutely private room with a lock, and in almost all cases a private bathroom (though some traditional B&Bs have shared bathrooms.) AirBnB covers a really wide range of sleeping arrangements, though. The cheapest are often just room to crash on a couch, which might work for students but not if you’re looking for more privacy. The most common situation might be that you rent a guest room and your hosts will be in the house with you. At the more expensive end, your host(s) might vacate the whole property while you stay there.

It’s really important, before you use AirBnB for the first time, to decide what you’re comfortable with and what your needs are in terms of privacy and space.

1b) Read the Description and Reviews!

 
Because you’re staying in a private home, once you’ve identified some good candidates in your price range and desired area, you’ll want to read the description carefully. It will list amenities like internet, whether or not there is kitchen access, minimum stay, refund policy, “house rules” such as “no parties,” and other critical information like, say, whether there’s an elevator to get to an apartment on the sixth floor in Paris! Reading the description and looking at the pictures provided will help you get a sense of whether the stay will make you comfortable.

Part of a Description of an AirBnB Booking

You can also (sometimes) look at reviews left by former guests. For your first stay, you will probably want to go with someone who has had many guests, to make you feel more comfortable. Later you might try a new host (who often list their rooms more cheaply in order to generate stays and reviews.)

2) Contact the Host

 
Once you’ve identified some good candidates, you can write a message to the host/hosts. It’s a good idea to say who you are and why you’ll be in town (tourism, visiting family, study, or whatever else) and to indicate what you’ll be like as a guest (quiet? wanting to party?)

Unlike a hotel, where you just call and ask for a room on specific dates, your potential host can accept or reject your request for any reason. So it’s best to be polite.

If you want to contact the host before committing to the booking — like, if you need to ask a clarifying question — you can do so by clicking on the host’s picture and going to his or her profile page. That will let you send a message privately.

3) Stay in Touch Before Your Trip

 
Just like you would with a friend, it’s a good idea to get in touch with your host a few days before your trip (if you booked ahead of time.)

Confirm that you’re still coming and make sure you know how you will enter the apartment or house (will the host be there to meet you? Will you have to locate a key in a mailbox or with a neighbor?) and how you will get in touch if there are problems (cell phone number?)

4) Your Stay

 
What your first stay in an AirBnB is like will depend on what kind of room you picked out. I’ve stayed in just about every kind of AirBnB setting. I’ve rented a whole apartment with a friend, which was great because we could cook our own meals sometimes instead of going out every day.

I’ve stayed in a small room in an apartment occupied by a single mother with 1-year-old twins — so we didn’t talk much! I’ve stayed in a beautiful guest room with a host who made me coffee in the morning. I’ve also stayed on a couch in an artists’ crash space in London, which fit my budget and featured some cool conversation, but was also scruffier than I was expecting from the pictures. My experiences have always been basically fine, but some have been better than others, for sure.

In all cases, you should feel safe. If you ever get to a booking and feel like your safety is in jeopardy, LEAVE IMMEDIATELY and contact AirBNB directly.

5) After Your Stay

 
If you enjoyed your stay, it’s common courtesy to write a quick note thanking your host. Most would probably greatly appreciate a positive review as well. However, if you didn’t think the booking was as advertised, you can write that in a review too.

To sum up, AirBnB can be a great choice for cost-conscious and easygoing travelers. If you’re up for a little adventure, it’s often more fun and interesting than a hotel stay, as well as less expensive. But you should think about how it’s different from a hotel and research thoroughly before you book for the first time!

Remember: Use our AirBnB link to sign up and you will get a free $40 off your first stay!

 
 
If you haven’t used AirBnB, what is holding you back? If you have, how has your experience been?
 
 

Ready?

Come closer!

Here’s the secret!

There isn’t one.

Really. Budgeting seems intimidating when you’ve never done it. And lots of us resist getting started because it seems hard, boring, and/or like it will slowly suck all the fun out of life. But take it from me: the only difficult thing about budgeting is deciding to get started doing it.

When I finally took the budgeting plunge a couple of years ago, my life changed for the better almost immediately. My budget became a tool that directed money towards my priorities and away from the random spending that was derailing my finances for no good reason. I wish I’d done it years earlier. But in retrospect, one of the things stopping me was that I didn’t really know how to budget for any further out than my next paycheck. So for those in the same boat, here’s a step by step guide to getting started.

1) Choose Your Tools

 
You can use a spreadsheet (here’s our free automated budget spreadsheet, software like YNAB, or a pencil and a notebook. But whatever you choose, prepare to commit to using it for at least a few months. Don’t write a budget on the back of an envelope and then lose the envelope. (Not that I’m speaking from personal experience or anything!)

A successful budget will be a budget you can actually consult as you implement it. So choose a place to write it down where you can go back and look at it often to see what’s working and what might need changing in the future.

2) Assess Your Monthly Income

 
Budgets are based on a simple principle: don’t spend more than you earn. Obviously, then, you need to know what you earn! For many people, that number doesn’t vary much. If you earn a salary then it stay stable from month to month.

But some people have a highly variable income. If you work as a freelancer, or if your income depends on tips, or in other situations, you might have very different numbers to work with each month.

If you have a variable income, budgeting gets a little harder. You can solve the problem in one of two ways:

• You can “live on last month’s income.” With this plan, you make July’s budget based on the money you earned in June. If June was a good month, then you can spend more in July; if June was a bad month, then you can tighten up your July budget to reflect what you actually earned.
• Or, you can make your budget by assuming an income number on the low end of your normal spectrum. If you normally make anywhere from $2000 to $3000 in a month, then make a budget that only spends $2000. If you earn more, you can use the extra for rainy-day savings.

OK, whether you’re on salary or whether you’re a tipped waitress, you now have a number you’re working with: your monthly income that you’re going to budget with. Great first step. Write it down!

3) Assess Your Obligations

 
Notice how I didn’t say “assess your spending”? That’s because in this step you’re only going to look at what you have to spend every month. That includes:

• Rent or mortgage payment
• Debt minimums (car loan, student loan, etc)
• Childcare (if applicable)
• Insurance premiums
• Utilities

Write these these necessary payments down, and add them up. Hopefully, the number you get will be much lower than the “income” number from step 2! Subtract obligations from income and you’re left with the amount of money you have to make the rest of your budget.

4) Budget for Your Goals

 
For me, this is actually the most satisfying part of writing a budget. Let’s say you started out to budget $3000 in monthly income. $1000 just got subtracted to cover obligations. Now you have $2000 left.

At this point, you can think about what you want to work towards. If you have debt, you can decide to make bigger payments, beyond the minimum. You can also decide to save for an emergency fund, for retirement, for a house down payment, for a fabulous trip to Europe, or whatever else.

Write down numbers that correspond to these goals. For example:

• $250: Extra student loan payment
• $250: Emergency fund savings
• $100: Roth IRA
• $50: New laptop fund

The numbers will vary based on how strongly you feel about the goal and on your income. But write them down. Then subtract the total, and what you’re left with is a number we’ll call….

5) Discretionary Spending

 
This is the part of your budget that will probably vary the most from month to month. Write down all the things you can think of that you spend money on, including:

• Groceries
• Restaurants
• Entertainment
• Cable
• Gas
• Clothing
• Pets
• Haircuts/makeup/personal
• Gym

Some of these might be a fixed amount (like cable and gym memberships) but others might vary from month to month. For your first couple of months, try writing down a figure that seems reasonable to you — “Groceries: $300,” “Clothing: $25,” or whatever.

Because discretionary spending can change so much, it’s both the most dangerous spot in the budget and the best place to look if you need to cut back. Food spending, in particular, tends to get out of control for a lot of people. You have to eat, but if you’re spending more than you’re earning, you can probably eat much more cheaply in order to stay on budget.

Once again, add all these numbers up and subtract the total.

6) Review Your Draft Budget

 
Let’s say, again, that you have $3000 of income to budget with. After writing down all your fixed and approximate expenses, how are you doing? Did all those expenses add up to $2500? Or did they add up to $3500?

If your first budget draft leaves you with “leftover” money, congratulations! You can go back to Step 4 and beef up what you’re budgeting towards your goals, either by making larger debt payments or putting more in savings.

If your first budget draft shows that you’re planning to spend more than you earn, you’re in trouble. You’ll need to cut back. The best choice is to ratchet down discretionary spending by letting go of inessential expenses. But you may also find that you need to be less ambitious about saving towards your goals.

At the end of your review, the amount you have budgeted should match your income. Now, you’re ready to put this plan into action.

7) Keep Calm and Budget On

 
Mike Tyson once said “Everyone’s got a plan, until they get punched in the mouth.” I’ve never been in a boxing ring, but I think your first month or two budgeting probably feel like that! All you can do is mentally prepare yourself for the fact that budgets need to be flexible.

“Stuff happens,” and you’ll need to respond in a very imperfect world. But that’s why the budget you built in steps 1-6 was organized from most to least important. If you need to spend on something that’s not budgeted for, that doesn’t mean your budget was a waste of time. It just means you need to move money from somewhere in the budget that’s non-essential (like entertainment or restaurants) to cover the unexpected expense.

8) Rinse and repeat

 
I think one reason why people don’t successfully budget is that the benefits of doing it don’t become apparent for a few months. In order to see the differences it will make in your finances and stress levels, you need to give it a chance to work. So, at the end of every month, look carefully at your budget. What worked? What might need adjusting? Go ahead and make the changes. But don’t abandon the budget itself.

 
 
Do you budget? If not, what’s holding you back? If you do, what tips or advice do you have for others who are just starting?
 
 

But you can’t work on building your credit score unless you know what’s on your credit report. Credit reports list how many accounts you have (both open and closed). That includes mortgages, car payments, and student loans along with credit cards. They can show negative marks for as long as seven years, so if you’ve had a bankruptcy or foreclosure or skipped payments within that time frame, those will show up.

Another reason to look at your credit report regularly is not just to check up on your own financial habits, but to make sure nobody has stolen your identity and used it to open accounts under your name.

Finally, up to 23% of consumers report finding an inaccuracy on their report — whether it’s because of identity theft, or just because of an error somewhere in the system. You won’t know about whether you’re one of them unless you look at your report.

Luckily, since 2003 the Fair Credit Reporting Act has required that consumers get access to one free credit report per year from each of the three major credit bureaus (Experian, TransUnion, and Equifax.)

It is really easy to get these reports. Most people reading this will just want to go to annualcreditreport.com. You provide your name, social security number, address, and date of birth, and answer a couple of identifying questions. Then you choose which credit report you want to receive, and it appears instantly.

However, you can also call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Don’t pay attention to the many, many websites offering you access to your credit report for a fee! You do not need to deal with them and should never pay for access to your credit report.

By the way, if you’ve already seen your free credit reports for the year, there are other circumstances under which you can get new ones. If you’re denied an application for credit, insurance, or employment because of your credit, and you ask for a report within 60 days of receiving notice, you can ask for another free report. You can also get more than one free report if you’re unemployed and job-hunting; if you’re on welfare; or if your first report was inaccurate because of identity theft or other forms of fraud.

One last tip: if you go to annualcreditreport.com, you can choose whether to get your free reports from the three bureaus all at once, or just to get one. Many people set a reminder on their calendar and get one free report every few months. This allows you to constantly check up on your credit report, for free, throughout the year.

Do you check your credit regularly? Ever found any inaccuracies on your credit report?