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BUDGET: What does this mean to you?

financial freedom with budgets
The Money Nerve Budget

BUDGET: What does this mean

to you?

Budget: an estimate of income and expenditure for a set period of time. Or “keeping within the household budget.” Many people cringe when they hear the word budget, and instantly assume it is a gloomy, painful process of giving up all the joy in their lives!

Since the word budget has such a bad rap, let’s make a change and call it “proactive money management” or a forecast. A forecast is a general vision of what’s to come; it allows us to make decisions for the next few days. We all know that the weatherman isn’t always exactly right, often changing the outlook as the clouds roll in faster or the sun bumps up the temperature.

When you forecast how you want to spend and save your money, you are pushing out your projection for the next week, month, 1-year plan and beyond. Just like a weather forecaster evaluates new information to share with viewers, you may have to adjust your financial timetable as “life” happens.

Be Honest and Accurate

To accurately predict the weather, you must set the destination. Knowing the temperature in Seattle has no meaning if you live in Miami. With your finances, you need to know where you are; how much you bring home and what your monthly expenses are. Creating an estimate of how you want to direct or point your extra money into different funnels establishes a roadmap for the plans or goals you set for the future.

If you are like 90% of Americans, you tend to inflate your salary and round down your bills. Try to flip that assessment around. By underestimating your take-home pay and then basing your monthly bills at the highest projected amount, you have now given yourself a cushion of cash reserves. That’s refreshing!

Inflow and Outflow

A budget doesn’t always mean cutting costs; it is merely a plan for how your money will flow into your life and then dispersed to others for the benefits you want. Most people apply their money to three main priorities: food, housing, and transportation. These are essential components for a higher quality of life, and once you have these taken care of, you can begin to set aside money for other important goals or dreams.

Write down every expense, good or bad. Don’t pretend that you always spend money wisely. We all have habits and plenty of opportunities to be wasteful with our dollars.

One of my colleagues Kelli, (aka the Freebie Finding Mom) has developed a handy budget sheet to track your cash easily. Take a moment to download this helpful resource HERE.

Finding Balance

If you discover there is not enough money for the three essentials of housing, food and transportation, then you must explore your options to find a reasonable balance. You could cut down on one of these components, (smaller apartment or using coupons for groceries) or you could ask for a raise, look for another job or add a second job on the weekends. Creating a forecast (or budget) of what bills need to be paid each month, along with one time expenses that come up each year –– gives you a good guesstimate of where your cash flows in and out. A lot of people arrange to get monthly insurance bills instead of one massive bill annually, and this makes it easier to stay on track and “In-Budget.”

Financial Freedom

Work your desires into your budget. Save for special events and big purchases. Once you have identified where your money comes in and how you want to spend it, you have the power to change your plans. You have opened a new door of opportunity with intentional, proactive choices. The benefits of forecasting your money flow include less financial stress, a new sense of understanding of what’s important and the freedom to choose how you spend your money!

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Identify Your Priorities

Identify Your Priorities
Identify Your Priorities

Identify Your Priorities

Priorities are not just limited to material things. A priority could be that you want to spend more time with your kids. You may wish to volunteer for those less fortunate than you. Or you may want to take classes to boost your skills. Now is the time to identify your priorities. It does not always have to be something that involves money—it’s about finding the right value for you.

Making Conscious Choices

When I first started working, money was tight. As a result, I had to be creative with my budget. I decided I needed some help and hired a maid. While that circumstance sounds like a contradiction, it was more important to me to have fresh sheets every week and a clean house than to spend my money on expensive groceries. Consequently, I made a conscious choice to eat lots of rice and soup, and honestly, I felt like a pampered king coming home to my spotless house and pressed linens!

Setting a Clear Picture

At my office, I once knew someone who worked for UPS. He was a smart guy, and I often wondered whether his job was fulfilling enough for him. One day, this deliveryman announced he was retiring! I was quite surprised as he looked too young; only about thirty-five years old. Why would he want to retire?

He started to work at UPS when he was eighteen, then worked for twenty years to earn a good pension. He had a couple of kids at a young age and set a priority to spend his time with his kids each afternoon. This UPS deliveryman chose to leave for work at four o’clock a.m. so he could return home around three p.m. – when the children got home from school. Being there for his family was a direct result of having a clear picture of his priorities.

Direct Your Choices Intentionally

My wants and needs are different than yours. Some of us have a strong desire to save for the future. Others want to live in the moment. Everyone has varying degrees of emotional tolerance toward our current financial situation. If your money nerve is pinched, one of the best vehicles for change is defining what is most important to you. Set three top priorities in your life to point YOU toward your strategic goals. By knowing your direction, it is easier to create a daily action plan to achieve your goals.

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Successful Holiday Shopping Strategies

Holiday Shopping
Holiday Shopping Strategies

Online Holiday Shopping

Black Friday and Cyber Monday 2017 hit the most substantial online holiday shopping sales numbers to date, with more than $5 billion spent on Black Friday and $6.5 billion spent on Cyber Monday! Now you have the rest of your holiday shopping to do. Amid the frantic pace of holiday parties, family gatherings, and business obligations, some of us still need to finish up purchasing additional gifts.

How Much Will You Spend on Holiday Shopping in 2017?

The National Retail Federation predicts the average per-person tab this holiday season will reach $967, up nearly 3.4 percent since 2016. A majority of shoppers plan to splurge on non-gift items for themselves too! According to Wallet Hub, Americans are on track to end 2017 with more than $60 billion in additional credit-card balances. That figure puts us perilously close to the nearly $1 trillion grand-total recorded at the height of the Great Recession.

Why Is It Hard to Set a Holiday Shopping Budget?

Many people get emotional about selecting gifts for family members and loved ones. The desire to get the very best present is often in direct conflict with the reality of keeping your budget on target. Going overboard for Christmas and beginning 2016 in debt is not your best course of action.

Setting intentions ahead of time creates positive, conscious choices which allow you to be deliberate about your spending during the holidays. Explore some of the holiday emotions that may pop up annually! Ask yourself, “Why?” Are those old habits or emotions still serving you well today? If not, brush away that family competition of purchasing the “best” gift? Stop worrying that you need to purchase a gift for every person you know.

Happy Holiday Shopping Without Over Spending

Stop thinking that overspending provides the best gift. Spread holiday cheer on a personal level. The holidays in the final months of the year originated to honor love, peace, and sharing. Remember that! Let those ideas help you to create more meaningful moments with family and friends, who are most important to you.

Here are five tips to make holiday shopping easier on your wallet:

1. Set aside $25-$100 per month in holiday savings. Spend cash.

2. Set your total budget.

3. Make a gift list and attach an amount to each person.

4. Take time to find the best deals.

5. It’s not the size of the gift; it is the thought behind it. There are many small and fun ways to show people you care!

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It’s Your Dream, Ask For It

Intentional Life with The Money Nerve

IT’S YOUR DREAM, ASK FOR IT

Adding a Deadline to a Dream Creates Goals

Remember as you dream that it’s your life and your goals. Dreams have the power to become goals, and effectively change a vision into reality. Remember your vision is not your mother’s list, society’s list or your child’s list. If buying something for others or driving an expensive car is at the top of your list, try to examine why. Are you making choices based on guilt or insecurity? Or is this goal motivated byaa deeply ingrained dream that you want to accomplish? If you’re not sure, ask yourself if this choice is a result of your emotionally reactive Money Nerve and explore your intentions.

Prioritizing Your Needs

Think of what’s most important to you. What do you want and why do you want it? Once you move away from the negative emotions that pinch your Money Nerve and head toward a more giving and empowering motivation, you may find that money will become a means to an end. I am not sure whether I have ever been passionate about crunching numbers; however, I am passionate about helping other people. I assist people to manage their money effectively by being the best accountant I can be, which is also financially rewarding.

Follow Your Heart

Pursuing your passion and following your dream often results in financial rewards, especially when you set thoughtful goals. When people can achieve financial stability, I love to celebrate their success. Are you ready to celebrate your success?

ASK FOR IT

You should ask for the things you want every day. Asking for help puts you in a state of mind that helps you recognize you are not alone and there is something greater than you at work. It also lets others know what is important to you. Putting yourself in that mental state allows you to be humble enough to become aware of a larger reality, and to accept help with an open heart.

Creating Small Daily Habits

Whether you get to that state by praying daily or by being inspired by Napoleon Hill’s book, Think and Grow Rich, you unleash the power of your mind. One habit – opening yourself up to reflection or meditation, allows you to create quiet space every day. This practice results in a better alignment of your thoughts and your actions

Positive Energy

You never know how you’re affecting people with the choices you make. Money is no different. You may not be able to control when or how your money decisions are perceived, used or squandered or even paid back, but you can control what you do! Somewhere in the universe, there is a karmic piggy bank with your name on it.

MAKE A PLAN

Now that you know more about yourself and can identify your Money Nerve, it’s time to create clear monetary objectives.  For more positive results when planning a lifestyle change, be sure to include short-term, mid-range, and long-term financial goals. Success with smaller steps or achieving a short-range goal will boost your confidence and make the bigger steps easier to accomplish. Keep your dreams in mind as you move forward with purpose.

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Does Money Buy True Love?

Money vs Time

Does Money Buy True Love?

My grandparents gave my family so much! We knew they loved us best! We were their only grandchildren. Their money bought TVs, stereos, a vehicle when we turned sixteen – and we loved being spoiled by them. But as children, we never thought to ask “does money buy true love?” When I was a young adult, and my grandparents needed some help around the house, I spent a few days in their yard fixing things up. At the end of the weekend, my grandfather tried to give me a hundred bucks, which I politely refused. My grandparents were very confused and hurt. They felt they needed to pay for everything, all the time. They could not comprehend that I simply wanted to spend time with them because I loved them.

Do you use money to “solve” problems or to make people like you more?

It wasn’t until recently that I realized what my grandparents were really saying with their overly generous attention: “We don’t feel worthy of your love, but if we give you lots of money, will you pretend to love us?” I was taken aback, hurt and saddened by that thought.

Using Money to Mask Insecurity

What I came to understand is that my grandparents grew up feeling insecure and unworthy of attention. The only way they thought they could convince people to love them was through bribery. My grandparents taught my mother the same lesson, which not surprisingly trickled down to my siblings and me. Buying expensive presents, always treating friends or family to meals or providing luxuries that they cannot afford, to make others love you more, isn’t a “real” relationship.  Even though the money was always used for positive experiences to create a loving environment, the cash did not create a bond; it was the act of connecting and caring that cemented the relationship.

Explore the Emotions that Propel You to Use Money in Relationships

Going out to eat, attending special events, and taking your family to Disneyland are all positive things that we do with friends and family because we care about them. However, if the underlying emotion is based on fear and need, it might be time to explore your actions. Are you afraid people won’t like you if you can’t splurge on expensive meals and events? Do you need people to admire you or feel awed and impressed with your generosity?  Is your money serving you well when you “buy” people?

Investigate the emotions that trigger your automatic financial response in relationships.  Check out ways to examine your actions – set aside quiet time to reflect on what’s most important to you or begin to journal. Start making conscious choices that will generate an authentic connection based on love and trust. By cultivating genuine relationships with family and friends, you will construct a lifestyle of proactive abundance, and that makes all the difference in the world!

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Tax Tips to Lower Your 2016 Tax Bill

Tax Tips to Lower Your 2016 Tax Bill

You still have time to cut your taxes — and make smart moves to lower next year’s as well. As a certified CPA myself, I am swimming through a pile of tax returns for my clients! I wanted you to have some good info on how to lower your 2016 tax bill, if you haven’t filed yet.  Here are some effective tips from SANDRA BLOCK, Senior Associate Editor, Kiplinger’s Personal Finance.

Most taxpayers approach the tax-filing deadline with a mixture of fear and loathing. But this year, there are reasons to be more sanguine. For one thing, because 2016 was an election year, Congress didn’t tinker much with the tax code. If your personal circumstances didn’t change last year, your tax bill probably won’t change much, either. And if you’re a do-it-yourself filer, you don’t have to get up to speed on a slew of new rules.

Because April 15 falls on a Saturday this year and April 17 is a holiday in Washington, D.C., you have until Tuesday, April 18, to file your federal tax return.

VIDEO: How to Prepare for Tax Season

Here are some ways you can still trim your 2016 tax bill, plus potential speed bumps.

Contribute to an IRA.

If you’re not enrolled in a 401(k) or other workplace retirement plan, you can deduct an IRA contribution of up to $5,500 ($6,500 if you’re 50 or older), no matter how high your income. You have until April 18 to make a 2016 contribution to your IRA.

Fund a health savings account.

You also have until April 18 to set up and fund a health savings account for 2016. To qualify, you must have had an HSA-eligible insurance policy at least since December 1.

Get credit for tuition payments.

The American Opportunity tax credit, worth up to $2,500 per eligible student for the first four years of college, is a valuable tax break for parents of college students.

Health care housekeeping.

President Trump has vowed to repeal the Affordable Care Act, but it was still in effect in 2016, so you’ll have to deal with it on your tax return. To avoid a “shared responsibility payment”—longhand for a penalty—you must prove that you had qualifying health insurance in 2016 or were eligible for an exemption.

Want to investigate these ideas  a little deeper? Additional details HERE

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Setting Your Financial GPS

financial GPSSetting your financial GPS is a strategic plan for reaching a life goal or planning a future destination. First, you need to know where you are and where you want to go.

When people get in a car and activate their GPS, it is assumed the device knows where the car is and will arrive at the correct address. From experience, you cannot always rely on it to be accurate. The same concept of reaching a target in your life must include your starting point and what you want to achieve. To make good financial decisions, you need to break the autopilot mentality and start thinking for yourself. Being on autopilot when facing money decisions means you allow roadblocks and congested traffic existing in your head.

On an actual freeway, you can see hundreds of cars ahead of you on the road. The roadblocks you have set up in your mind tend to be less obvious. Nobody is setting out an orange cone with blinking lights telling you to merge your credit card debt.

Budgeting inertia and increased mental stress take place when you try to juggle payments on seven credit cards or transfer money from one bank account to another. Have you ever freed up expenses on one credit card so you can charge more on it while making a payment for another card? Do you wait for a paycheck to cover checks you just wrote? Time for a new roadmap!

A financial GPS can be a terrific tool for setting a destination from your start point to a future goal. Even when your financial advisor and your accountant set up external steps for you to follow, you are ultimately the driver of your “monetary” vehicle. I have several clients who, in the face of grave consequences, have driven right off a fiscal cliff – despite having been informed of its presence.

Collectively, many of us have become unconscious and drift through the “business” of our lives. As you become aware of what direction you want to go, you can work your way out of that dream state. Slow down and make conscious choices for the next three months. “I will not charge my credit card; I’ll just skip going out to dinner this week.” “Maybe I do not need three new outfits.” “I should balance my checkbook.” “Take a breath and focus.” (It is good to remind yourself to slow down.) Now you can actively manage your money rather than frantically reacting to fiscal surprises.

Makes life more enjoyable!
Bob

Follow @themoneynerve on Facebook, Instagram, Google+ and Twitter

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Become More Aware with Daily Journaling

Daily Journaling

Setting aside a few minutes for daily journaling each morning or at the end of the day creates a greater awareness of your actions, and what changes you would like to make. You may have noticed that you have an emotional response when dealing with your finances. As you define your “Money Nerve” and begin to see what makes you uncomfortable, quiet reflection each day provides you a powerful tool to become more proactive with your decisions.

This process of self-discovery is not easy. If it were, everyone would be debt free and have enough money in the bank to live comfortably. Facing your Money Nerve can be stressful and frightening. Let’s say at this point, you are fearful and not yet taking steps to make your life better. Are you willing to experience the fear and still push through it? Most people go toward change kicking and screaming. They may think there is less risk when they box themselves up and resist change. The environment around us is changing so quickly that adaptation is a necessity. Those who are willing to make changes by being honest and facing their emotions are the people who are moving toward success.

Taking an emotional inventory at the moment is the first step. This self-reflection helps you become aware of how you feel when you make financial decisions. If you are having difficulty figuring out how your Money Nerve affects your finances, use daily journaling to think back to moments during the day when you had to make a financial decision. Choosing to buy coffee for a friend or waiting to make a credit card payment may have triggered your Money Nerve. Ideally, you’ll start to note your emotions at the end of every day, as part of your mental mapping and reflection. Tips for starting a daily journal.

If it is hard for you to carve out time, try this strategy: When a client or friend is 15 minutes late or cancels their time with you, see that moment as “extra time” and use it to meditate or find a calm spot in your day. You can simply enjoy the quiet or jot down notes on how the day is going, and what you would like to see happen — by the end of the day. Are you making daily decisions based on fear or are you proactively forming decisions that can be accomplished with small conscious choices each day?

Be aware and make time to address the change you want to see in your life. Become responsible for your life, your finances, and your mental attitude. You are now making a choice to create change – now is a good time to purchase blank paper to reshape your life dreams with daily journaling! Want to learn more about easing your Money Nerve?  You can receive a monthly newsletter with helpful tips and motivational guidelines to find your financial freedom.

Time to sharpen your pencil!

Bob

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TAKING STOCK – A FINANCIAL PICTURE

3x3 Credit ScoreJanuary is often a “holiday-hangover” month for many. February is a great time to take stock and move forward. This week, we will explore credit scores and reports and how they affect you.

What is a credit score and why is it important? Credit scores were initially set up as a way for large financial institutions to provide an algorithm for determining people’s credit worthiness. Most people have misconceptions about their credit and the credit scores. Credit scores are defined by a three digit number – although most Americans would prefer to see a grade: A, B, C, D and F for easier understanding.

• Excellent Credit: 750+
• Good Credit: 700-749
• Fair Credit: 650-699
• Poor Credit: 600-649
• Bad Credit: below 600

Will my credit go down if I keep checking it? How often should I check my credit reports or my score? No, checking your credit or applying to pre-approved offers will not impact your score. Multiple credit card inquiries or applying for a mortgage will show up as a “hard inquiry” and could lower your score a few points. You can check your credit every four months without repercussions, if you are monitoring to raise your numbers, but a good rule of thumb is to check it annually.

You can get your credit score free once a month at Credit.com.

Will my credit score affect getting a new job? No, when companies ask for permission to access your records, they are looking at your credit report to see your credit history.

How do I check my credit report?
You can review your full credit report for free at AnnualCreditReport.com, which provides you with a free credit report once a year from each of the three credit bureaus. You want to confirm that all the details are correct. If you find outstanding loans that do not belong to you or see that an account is listed as unpaid- when that account is in good standing; you can make corrections or stop any fraudulent activities. Another free website for checking your credit is Credit Karma.

How can I build my credit? Paying utility bills on time, open a savings account and take out a small, secured loan (using the amount you have in the bank). You repay that loan from your savings account. Be sure to set up automatic payments, so you are never late. You can also get a secured credit card that is tied to a set amount you have in savings.

Have a diverse financial path that includes paying bills on time, a car note and a credit card, on which you make weekly or monthly payments. Late payments will ruin your credit report and your score.

If you own three credit cards, only use 1 or 2 of them & keep the 3rd in reserve so that your % of debt stays low.

Being conscious of your “numbers” can provide you with the ability to see where you are NOW, helps you set your financial GPS to set new goals and to gives you the opportunity to make proactive decisions for an abundant life!

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CHRISTMAS “TIME”

3x3 Gifts of timeChoosing to make conscious choices for your money and life may have implications in many aspects of your life. Set aside some quiet time this December and create a mental space to listen to your thoughts. Decide how to spend your holiday season, using your goals to give you focus.

What would your “perfect” holiday look like? Maybe it includes parties with friends, spending time with family, or taking time to express your gratitude. This is such a hectic time of year. Many people feel overwhelmed by obligations presented by school, work, family and friends. Invest your time in activities that bring you the most value.

Choose which activities you will spend your time on and know that you may miss some parties or invites. Setting boundaries for a successful holiday helps you maintain your sanity, increase your sense of gratefulness and keep your “spirits bright!”

Take that one step further and spend time with those closest to you this month. Listen to your spouse, best friend or family members and notice what is important to them. Investing time with people who are special in your life strengthens your bond with them, creating more meaningful relationships.

When shopping, instead of buying four gifts for each person, purchase one item and plan an experience to accompany the gift. Purchasing clothes? Plan a date night to enjoy the new outfit. Have a friend who loves to cook? Wrap up a new piece of cooking equipment and sign up for a cooking class together. Give a gift of time to complete the gift in a box! Many people find investing in others reaps greater benefits in the journey of life.

Share some of the activities that your family or circle of friends love to do — and make the holidays extra special every year.

~ Bob