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How to Budget Your Money Like Robin Hood

“Steal from the rich, and give to the poor.” That was Robin Hood’s cry. As the greedy Prince John taxed away all the people’s money, leaving them destitute, a hero had to rise up. So Robin Hood stepped up and became the hero that everyone looked to for help and hope.

Perhaps inside of you, you have an inner Prince John lurking in your heart preventing you from learning how to budget your money. Does that greedy side steal away precious money for pleasure, while so many of your needs are left penniless? An insatiable lust for designer clothes, cutting edge technology, entertainment, gourmet food, or even little things like nail polish or candy bars could be emptying your coffers, leaving car payments, rent, student loans, and other important bills unpaid.

If so, it’s time to tap into your soul and bring out the hero – your inner Robin Hood – to rescue you from greed and budget your money for good! Only then, can you discover exactly how to budget your money.

Your Key: Good Budgeting Requires Courage and Strength

As you try to breathe life into your inner Robin Hood, it’s important to believe that you possess both courage and strength—it will take both to overcome your greedy villain, take back the money that is being improperly used and return it to the things that need it.

If you don’t think you have courage or strength, you’re wrong. Even realizing that you have a problem shows that you have already taken the first steps on this hero’s path. You know who the enemy is and that you need to do something about it. Your courage and strength are already starting to emerge. Don’t let anyone take this away from you in your journey toward financial independence!

The Plan of Attack

Next comes the game plan. As Robin Hood and his Merry Men (no doubt you also have family and/or friends willing to support you) prepared to steal back the money from Prince John, they laid out a careful plan to ensure success.
For you, this means sitting down and planning exactly how to budget your money. Really, it’s just a matter of redistribution of wealth within your own little fiefdom—your personal finances.

First, identify how much money is being siphoned away unnecessarily that you can take back and use elsewhere. You don’t necessarily have to go cold turkey, but you need to commit to redistributing a sizable amount of that money towards more important needs.

Second, rank your expenses in order of importance to help you understand your needs.
Third, make sure the most demanding needs get the most money back. Carefully plan out how much of your income will go where, and put it in writing.

Remember, life is unpredictable. Sometimes no matter how well you plan ahead unexpected expenses will come up. If you find that one month you end up coming up a little short that’s ok. Do what you need to do to take care of your emergency expense, whether it’s getting a payday loan or paying with a credit card and then readjust your budget to get them paid off as quickly as possible.

Turn the Key to Put Your Plan into Action

This, of course, is the most challenging step. And that’s ok – because real heroes are made by overcoming challenges. So sling on your figurative bow and invade that castle of greed. Stick strictly to your plan and don’t back down in the face of opposition or temptation. (But if you do slip, don’t despair! Get right back up and keep going!)

Yes – changing your spending habits will be difficult. But you can do it! Always keep in mind the purpose that you are fighting for and soon, your battle will be won!

Learning how to budget your money is an epic journey. Don’t expect to get there overnight, and remember: we’ll be with you when you need a little help along the way.

5 Great Ways to Save Discretionary Money

The money you set aside for discretionary purposes is a truly wonderful part of your budget. It’s that little section of money that you feel is truly yours. All other amounts are the sole property of your debtors. A few thousand go straight to living expenses that can’t be avoided, ex. mortgages, car payments, utilities, and food.

While some financial experts will say that as long as you have debt you should never be setting aside any discretionary money, it’s important to not let your budget feel as though it’s strangling you. If you feel that your budget is too strict it will usually lead to just losing your budget altogether.

As long as you are working towards paying down your debts and your immediate financial responsibilities have been paid such as short term or payday loans that are due, the discretionary money is yours that you can use for anything, and that comes with a truly freeing feeling. Wouldn’t it be nice therefore if you could stretch that discretionary money to encompass more things?

Luckily you can. There are a lot of ways you can save money on things you would already be using your discretionary money for. Here are 8 of the best ways to do it.

Save Money on Entertainment

Begin by getting a library card. For those readers and movie watchers, a library card allows you access to nearly unlimited literature and cinema for free. With the recent advance to e-book checkouts, you can check a book out without ever leaving the comfort of your own home and read it on your e-reader. After a normal checkout period, your book will automatically delete itself from your system.

You already pay for the library system with your taxes; why not take advantage of the resources that are rightfully yours? Get a library card and check out a book or movie before you buy it.

Most of the time, you won’t read or watch these stories again. Why buy them if you’re never going to pick them up again? Library cards will help you filter out the books and movies you would like to own.

Once you find the media you can’t live without, you can use your discretionary money on them. Until then, don’t waste your money on them yet.

Ask a Friend

Second, share entertainment amongst your friends. If you don’t own a particular movie, someone you know likely does. Ask to borrow the movie for a weekend and return it promptly afterwards. With an extended network of friends, you can get your movie fix without having to purchase it.

Timing is Everything

Third, stop paying for the more expensive entertainment when there are cheaper options. A Friday night movie is nice, but a Saturday afternoon matinee is cheaper.

When the difference in price comes down to the time of day instead of quality of product, the choice can be a no brainer. Go see that movie you’ve been dying to see, but see it at a cheaper price.

Make Your Hobbies Pay

Fourth, invest in something that will turn a profit when it’s time to sell again. Turn a hobby into an income. If you’re interested in guns, make that into a money maker. Buy a gun, modify it, use it to your heart’s content and then turn around and sell it for more than you spent on it.

Just as long as you’re using the gun for your own use before selling it, you won’t have to create a business out of it. It’s just a way to make money off the investments you put your discretionary money into.

Turn whatever you are purchasing with your discretionary money into something you can sell again later. Some ideas will be more obvious than others, but with enough of a creative idea, you can learn to make money instead of just spend it. An additional source of income is never a bad thing either.

Look For Free Entertainment

Fifth, find as many free things to attend as possible. You can find outdoor movies, meetings, plays, and celebrations going on all the time, especially during the summer. Don’t be afraid to try something you wouldn’t normally do either.

Go to see things simply because they’re there to see. You will enjoy a more rich and diversified life if you get out there. You will learn more about the world, even if all you learn is that you don’t want to be a part of that experience again.

Wherever you live, free events are going on all the time. Get involved with the community and you’ll know where they are.

Just because your money has been marked for free use, doesn’t mean that you have to use it without thought. The occasional night on the town is a great activity to use it on. Most of the time though, why not stretch it a bit to get maximum enjoyment?

You might find better uses for that money if you don’t use it on the first big idea that pops into your head. Other times you’ll make something more with it than you ever thought possible before.

Tip of The Week: Don’t Bank on Financial Windfalls

One of the most common daydreams among people both young and old is having a large amount of money dropped in your lap out of nowhere. Whether it’s a sudden inheritance or a hefty tax return it’s easy to let yourself dream about all the things you could use a large financial windfall for, whether it’s a new car, larger house, home improvement projects or a dream vacation the list can go on and on. While it’s fun to dream about financial windfalls coming your way, it’s important to understand the difference between dreaming and reality when it comes to your budget.

financial windfalls

As a lot of people start working on their personal budgets they start daydreaming about how they can pay certain bills or mortgages off faster if they had a financial windfall come their way. Sometimes if people aren’t careful they’ll start banking on these financial windfalls coming their way and justify new purchases based on the hope that somehow they’ll get a bunch of money out of nowhere. Some of the most common windfalls that people bank on include:

Tax Return- This is by far the most common windfall that people seem to bank on. Tax returns can be an amazing way to quickly build up your savings but because of all the marketing directed at people on how they should spend their tax return people usually end up throwing away their tax returns on more consumer debt such as a bigger tv, new appliances, etc… While there are sometimes legitimate uses for your tax return such as fixing a leaky roof, vehicle repairs etc.. if you are truly trying to improve your financial situation you should use your tax return to either pay down your consumer debt or put the money into savings.

Salary Bonus or Raise- If you’re fortunate enough to have a job in this economy you should consider yourself lucky. If you are even more fortunate to work for a company that is doing so well that it has a surplus to offer as bonuses to their employees you are very fortunate. A downside to bonus or a raise is that it can lead people to irrational spending. If you know that a bonus or raise is coming your way it can lead you rationalizing big purchases with the thought that you’ll be able to pay for it once your big bonus comes through. The problem with that thought process is the fact that you never know for sure how much your bonus or hopeful raise is going to be, another thing that a lot of people don’t want to think about is that sometimes when bonuses are supposed to be released, companies will sometimes do layoffs instead because they’ve been looking at the numbers and they realize that they need to do something drastic to improve the numbers for the quarter. If you make several big purchases leading up to a raise or bonus and end up getting laid off instead it can put you in a very tough spot financially.

Unexpected Inheritance- Time and time again you’ll see this windfall used as the source for movie and television show storylines. The classic story of a distant relative leaving millions of dollars to you is a nice story but not likely to happen. With so many movies and television shows using an “unexpected inheritance” as a storyline it’s no wonder that so many people think that it could happen to them. While it’s fun to dream about, it’s just not realistic to spend irresponsibly with the hope that a distant relative is going to pass away and leave thousands or millions of dollars in your name. As crazy as it may sound, sometimes people don’t even bank off of a distant relative leaving them a large sum of money, sometimes people will dig themselves into a large financial hole thinking that their elderly parents or grandparents will pass away soon only to find out that there was little or no inheritance to be had. In addition to just being distasteful it’s a poor financial move as well.

Lawsuit Settlement- With this point we’re not discussing frivolous lawsuits, but the fact that sometimes people find themselves the victim of an accident or have been injured in some other way and are workings towards a settlement that will help them overcome the pain or injury caused by the accident. Sometimes people will look at a lawsuit settlement as a great way to get have some extra money but what they need to take a serious look at is that even though these settlements will cover the major medical bills, you’re most likely only rewarded money for “damages” if they feel that you’re going to have some ongoing pain or discomfort as a result of the accident which could mean future medical bills and other expenses. So while it may be tempting to spend your new found money on consumer products, set the money aside, maybe even in a different account to help pay for additional medical bills that may come in the future.

Regardless of whether or not you do find yourself the beneficiary of a financial windfall in the future, the key is to be disciplined and stick to your personal budget. If you have some money land in your lap unexpectedly, pay down your debts or put it in the bank and act like it never happened. That way you will be able to move closer to your goal of financial independence.

Tip of The Week: If your cash disappears, find a way to track it.

Do you ever get to the end of the month and wonder where all of your cash went? Most people have found themselves in that situation before; the big key is to not let that happen month after month. In this post we’ll cover a number of ways that you can better track you cash so that you can avoid being “cashless” at the end of the month. Before we get into this post it’s important to point out that there are definitely two very opinionated views as to which is a better way to track your finances, whether it’s using a cash system or tracking it electronically with a credit, debit or prepaid debit card.

We will cover some of the views on both using cash vs. using credit and talk about some additional ways that you can better track where your money is going. The biggest thing to keep in mind is that fact that regardless of whether you use the cash method or us a credit card you’re going to have trouble staying within your budget if you lack financial discipline.

Being More Financially Disciplined

Being more disciplined financially is a lot easier when you have some desire or a reason to be stricter with your budget. We recommend sitting down before you start your new budget thinking about your goals. Is your goal build up your savings or perhaps you have a lot of consumer debt you’d like to get rid of, either way you need to do something to make those goals more real. One of the best ways to make your goals real is to have them in front of you every day.

If your goal is to get out of debt, keep a running total of your debt on your bathroom mirror or somewhere you will see it every morning that way that number becomes real to you, and while it might be painful to see it every day that will keep it in your mind. If you goal is to build up your savings or save for a family vacation, put pictures of that vacation up throughout the house, that way when the temptation to spend uncontrollably comes, and it will, you’ll have a constant reminder of why you can’t go out and spend all your money.

Now when it comes to tracking your money each month there are two main schools of thought. One is to only use cash so that you limit your spending, and the other is to use credit or debit cards because you’ll be able to track each transaction, where it took place and the date. Realistically regardless of what the “Gurus” say, it’s up to you to decide which route is best for you.

The Cash Only Method

There are several financial gurus that claim that using a cash budget is the only way to go. The financial guru that is by far the most vocal about using cash instead of credit cards is Dave Ramsey. The main reasons Dave Ramsey says not to use credit cards include:

  • You Spend More With Plastic than Cash- On his website Dave is adamant about the use of credit cards when he says that, “There is no positive side to credit card use. You will spend more if you use credit cards.” To further prove this point Dave cites a study done by McDonalds on his website showing that people who paid with credit cards typically spent 47% more on their orders. While that may be true there are also studies that have shown that people are more likely to spend less when using a credit card. A study done by Carnegie Mellon University found that in some cases the use of credit cards actually lead to lower spending.
  • Millionaires Don’t Get Rich on Credit Card Rewards- This reason comes from the fact that some people will argue that credit cards are worth it because of the fact that you can get 3% cash back or skymiles etc.. While there are no millionaires claiming they made their fortunes off of cash back programs they can still be an extra benefit when using credit cards responsibly.
  • Credit Card Companies Will “Misplace” Your Payment and Charge You a Late Fee- While this may happen from time to time, it really seems like a bit of a stretch to make his point or a bit of paranoia. Most companies are good to work with you and remove fees if you can show a paper trail of some sort.

While these are some valid points, it’s also important to understand that it’s just as easy to blow through your cash as it is to swipe a card so if you don’t have a constant reminder of WHY you’re trying to get out of debt as we mentioned above.
In addition to people promoting the cash only method there are also some big names pushing electronic transactions whether it be through credit or debit cards. The biggest name by far is Bill Gates, his foundation helped finance The Better Than Cash Alliance whose mission it is to bring safe financial transactions to the world’s poor and unbanked. According to the Alliance there are five main reasons why electronic payments are better than cash payments.

  • Transparency: Less corruption and theft when payments can be easily tracked. In Afghanistan, U.S. aid agencies use it so workers aren’t so vulnerable to robbery.
  • Security: The money gets where it’s supposed to go.
  • Financial inclusion: Electronic payment is a way for unbanked people to establish a record of on-time payment of their bills. This can be an “on-ramp” for them to get other services, such as loans, speakers said.
  • Cost savings: Moving physical cash around is costlier than zipping electrons. Many poor people, however, still find it cheaper to use cash, because some cashless networks charge high fees.
  • Access to new markets: This benefit is mainly for providers of financial services.

While there are definitely pros and cons to both options, we recommend figuring out which option best suits you and going from there. As we’ve mentioned before, the key to success is always remember why you’re doing this. To be able to keep better track of your cash you’ll want to follow the steps below.

Step 1: Income vs. Expenses- The first step in creating a budget is figuring out how much money you have coming in, and how much money you have going out. With this process you want to get as detailed as possible include income from your job, investments, interests on bank accounts etc.. In addition to getting a detailed outlook of your income you’ll also want to look at all of your expenses, we also recommend looking at your monthly expenses as well as expenses that will come up once a year such as property taxes, vehicle registration, and then take those annual expense and divide them out across the whole year so that you know how much you’ll need to save each month for those. Once you have that figured out you can start putting together a plan to improve your situation.

Step 2: Create a Budget- When it comes to creating your budget there are several ways to do it. The most important thing is to stay organized so once you’ve outlined all of your different expense we recommend breaking up your expenses into categories such as food, gas, clothing, entertainment etc…

Step 3: Start Cutting Expenses- Once you have all of your expense laid out it’s time to see which ones you can cut. If you see that your “Entertainment” category is busting your budget it’s time to think of less expensive ways to go out and enjoy yourself.

Step 4: Stick to Your Budget- Once you’ve created your budget; it’s time to put it into action. Be disciplined; always be looking for ways that you can minimize your expenses.

By following these four simple steps you’ll be able to avoid spending all of your money and seeing your cash disappear every month.

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