Be Satisfied With Budgeting Strategies

It is often said that money is not the only important thing for an individual. However, you can find something next to the air that tells, that you cannot live without money. Money gives you freedom and choices. The first step in managing the money is to determine the budgeting strategy that works best for you.

Budgeting Strategies That Really Works


Maintaining the right balance between your income and expenses would probably help you to have a sound financial status.  Creating a spending plan will help you to regulate and establish whether you have enough money to carry out the things you need to do, or you would like to do.

There are numerous ways to create a budget. However, there are a few things that have to be kept in consideration before framing an effective budget.

  • First of all, you need to think about your financial goals. What is the purpose of the budget and what are your financial goals; whether you need to pay off your debts, making saving to buy your dream home, making plans for your future, life after retirement or plans that you are saving for the post-secondary education for your children.
  • Keep track of your expenses. You should know what your incoming money is and how much is it outgoing or what is the expense?. Even small changes to your regular spending habits will make a lot of changes to your budget and help you to save. For example, if you are spending nearly 3 dollars for coffee every day, in a year, you are spending an average of 950 dollars.
  • Understand between your needs and wants. A need is something that makes your basic necessities of life like the food, clothing, and shelter, however, a want is something that it is not necessary rather you make the expenses out of impulse. For example, enjoy eating at hotels though you have healthy cooked food at home is a want rather than a need.

Based on these aspects, you can design the right financial budget which can serve you the best. Let us see what these strategies are

Having Problems Sticking To The Budget Explore Solutions

Sticking to the budget is one of the toughest decision in life. Although it looks frugal in the beginning, however towards the end of the month, you would be literally surprised to see that you have money left behind in your wallet. In order to achieve this, you have to be more financially responsible.  For this, you need to

  1. Create an annual budget to figure out the things spent on bills and basic essentials. Based on the leftover, determine how much you can set aside for your savings
  2. Track down all the expenses you make. This will offer you a better insight into whether your expenses are happening for unnecessary reasons
  3. This can be done using a mobile app. Take advantage of technology to get accurate results
  4. Make your expenditures through bills rather than credit or debit card. Determine how much money, you will require for the week and take the money out of your account. When you run out of money stop your spendings.
  5. Grocery shopping is one of the incredible ways to blow your budget, so when you want to stick to your budget stick to the grocery list and never go far behind it.

Multi-bank account budgeting system – If you want to get out of debt and make your finance in order, then in addition to sticking to the budget having multiple bank accounts or breaking down of your accounts is essential, it can be so effective for a number of reasons

  1. Household checking for living expenses
  2. Set aside money strictly dedicated to eating out
  3. Bills account that you require for quarterly, semi-annually and annually
  4. A separate account for escrow monthly mortgage payments

Cash Envelope System

One challenge that people have during budgeting is, they don’t have money directly in their hands, and instead they are in the form of credit cards and debit cards. However, these things make you lose track of things and don’t have any insight into how much is the spendings. This will lead to making financial mistakes. Apparently, cash envelop system is an ideal solution to sort out this problem.

Zero-based Budgeting

When a written budget is followed, it removes a constraint from your finances. Perhaps, the best form of budgeting in which the expenses must be justified and approved where your income subtracted by expenses turns zero. It is one of the open and transparent ways of creating a budget.

Closing Thoughts

Each of these strategies has both benefits and flaws. Although it is pretty hard to follow however when you make it as a habit, it can become part of your lifestyle. The overall point about these strategies are, they don’t require a bigger spreadsheet for your budgeting, or endless number that require calculations rather they are simple approaches that can be overwhelming when you save a considerable amount of money.

Advantages Of ETFs

Exchange traded funds better known as ETFs have been a part of the investment market for many years. So it is quite evident that their popularity is continuing and is also increasing. Mentioned below are some of the advantages of ETFs.

Cost Efficient:

There will a single transaction that will be conducted per trade and hence the commissions are much lower on ETFs as compared to an index that needs various stocks along with multiple trades. Load fees are also not present. The managing fees of ETFs are lower in comparison to the regular mutual funds. ETFs are not expensive to buy, sell as well as own. On average the cost involved in ETFs investing is 75% less than the cost of mutual fund investment. A transaction fee to buy ETFs is there. But the extra costs such as sales loads, exit fees, distribution fees, commissions, annual marketing fees along with early withdrawal penalty that is associated with mutual funds are not applicable to ETFs.

Tax Benefits:

Capital gains take place when a security is sold off at a high price compared to its purchase price. Since ETFs have a very passive investing approach, there lie fewer security turnovers in an ETF. As a result of this capital gains along with its potential for lower distribution at the year-end are triggered not so frequently. The taxes of capital gains for ETFs are much lower than for any traditional mutual fund because of each trade’s structure. If a gain is identified in everyday trade of mutual fund or in any index trade, taxes of capital gain will be incurred immediately. But with ETFs, it is completely the opposite. No single capital gain is identified until selling of the assets occurs along with the total fund. Thus ETFs are considered as one such investment that is tax friendly. In case of any dividend ETFs, the pay-outs of actual dividend are differently treated and it will also create a tax benefit.

Diversification:

If you buy an ETF, you will be getting instant exposure to its following index. It will contain a huge number of securities. An ETF will give you exposure to a group of equity, market segment, and style. It is capable of tracking a wide range of stocks or making an attempt of mimicking a country as well as a group of countries returns. Mutual funds can also be diversified. But ETFs have lower fees and they trade similar to an equity investment. So it will act as an excellent way to achieve exposure to various asset classes that will be diversified.

Simple:

Investing in the shares of an individual company requires professional help. But active funds also need lots of research. You are never sure how your manager is actually running the money. But ETFs have an aim of matching an index and thus they are known as straightforward investments. The structure of ETFs are simple and thus they can be easily understood other than intricate funds like leveraged as well as inverse ETFs. So if you wish to invest in a particular industry or emulate the rate of interest on any specific index or maybe underlying asset, you can start off with ETFs.

Transparent:

If you invest in ETFs you will have a proper understanding of whatever you will be buying. Most of the ETFs are seen to replicate their underlying indexes and hence their components are getting disclosed each trading day. But the traditional mutual funds will be revealing their total holdings once quarterly. Once you can find out what is actually present in your fund portfolio, you will be able to evaluate how well your fund manager is adhering to each and every objective as well as the fund’s style.

Variety:

ETFs offer choices that are inaccessible through mutual funds. It has been reported that at the end of the year 2015, almost 1600 ETFs were available in the US. Along with the equities, ETFs also offer various investments in commodities, fixed income, currency, and international security. ETFs cover the US investing scene from different angles, thus making them one such investment tool that is very flexible. One can invest in ETFs by market capitalization as well as sector or even asset class. International ETFs are also available and they are hedged to the Canadian dollars. So no need to feel worried about any impact of changes in the currency exchange rate on the returns. With the help of this variety, investors will be able to make some targeted investments very easily and also attain a diversification level. This level of diversification will not only be time-consuming but also costly to replicate by purchasing individual security.

So there are many advantages that will make you believe that you should include ETFs in the investment portfolio. ETFs will act as your ultimate investment tool among all the other solid investments.

Benefits Of Rental Property Investment

Rental properties are bought or developed properly to earn income. These properties are considered as a true business my many people. So if you are thinking of becoming a rental property owner then you must have a look at the below-mentioned benefits.

Rental Income:

One of the biggest benefits of owning any rental property is the fact that renters will be providing you a direct and steady source of income. The rent checks that will give you monthly will directly go in your account. This will be more than enough for offsetting expenses for that month. If you own a property that you have rented out for $1500 each month, then that house will give you $18000 each year when completely occupied. With rental property investment, partial results are also great. So if you rent your property for at least half of the year, then also you will be earning enough. Try to use your networking skills as well as time to get hold of better deals that will be providing you a much better and greater return. So by investing in a property that will be occupied by tenants, you will be receiving rental income and it will become your passive source of income.

Appreciation Of Real Estate:

Individuals who invest in real estate can earn money with the help of cash flow as well as appreciation. Appreciation of real estate means an increase in the value of the invested property over time. So it simply means that when an investor will be generating steady cash flow from his rental property, more value will be added to the property. Thus by renting your property, you can hold because if it appreciates you have the option of selling it off at the right time. The amount of appreciation will vary according to the market. You can research the potential of the appreciation of various cities along with your neighborhoods to find out what you can expect.

Tax Write-Offs:

If you are an owner of a rental property, then will receive great tax deductions. You can get rid of the interest on the mortgage and credit cards that you used to purchase the property. You can also write-off the insurance, any maintenance repair, travel expense as well as property taxes. Other than these deductions, depreciation of the purchase price of the property is also allowed on the basis if some depreciation schedule even if the property is appreciating well in value. So if you own of a rental property, you will get several tax benefits that will help you in mitigating all the risks as well as grow the returns.

Inflation:

Are you afraid of the term named inflation? But if you own a rental property, you should not. Real estate investment acts as a shield against inflation. As a result of no property investor if affected negatively by inflation. If inflation occurs, any individual who owns a real estate property can escalate the monthly rental charges. The value of the property will increase. If you plan to sell the property during inflation, you can also list it for a high price and earn profits in real estate markets that have less supply of the investment property.

Direct Management Of Investment:

Investors of rental properties will be solely responsible for my investment’s outcome. Before buying a property you should analyze it well. Ensure that the property is in proper condition for renting. You do not have to depend on anyone else to manage your investments directly as well as personally.

Huge Variety:

Rental properties will offer you a wide variety within an asset class. As a rental property investor, you will be able to make an investment in single-family houses, multifamily property, office buildings, and many other options. You can also find larger, smaller and newer within each of these classes. So you will have endless possibilities as a rental estate investor.

High Security:

There are many people who shift temporarily for work and some inherit their family house as they do not wish to sell them off for sentimental issues. There are several reasons due to which individuals will find themselves with an empty property. Any vacant house is left open to vandalism as well as squatters. The maintenance issue also goes unnoticed. This can quickly lead to greater problems. It is really difficult to keep an eye on such a house where you no longer live. So renting such property to tenants will give peace of mind. You will feel relaxed that the property is maintained well and taken care of.

Owning a rental property can benefit you financially as well as personally. Rental properties like any other real estate investments always come with risk. So becoming a rental property owner is a great commitment. But you need to handle it well and let this huge commitment bring great financial returns.