You’re used to the normal expenses such as dance tickets and apparel, sports fees, game tickets, and club dues. But, goodness, all that pales in comparison to the pressure you’ll feel left and right for the things you’ll be asked to pay for during senior year. Some of those expenses may even be mandatory depending on the school.

• Senior Pictures – formal school yearbook pictures and informal personal photography
• Homecoming / Prom
• Graduation Announcements – Don’t forget the Thank You notes and Stamps!
• Graduation Party
• Graduation Gift
• Class Ring
• Cap & Gown, tassel, cords, and stoles
• Senior Trip/Bash
• Yearbook
• Letterman jacket
• Miscellaneous Senior Gear – t-shirts, hats, keychains, etc.
• Diploma Frame
• Test fees – AP/SAT/ACT
• College Applications & Transcript fees
• Travel for College Campus tours

That’s a pretty long list that can quickly add up to thousands of dollars. Of course, your actual costs will vary widely based on your family and the high school. Some schools require seniors to purchase or rent a cap and gown, while other schools provide these for students. There may be things that families can easily decide to cross off their list as well.

Homecoming and Prom will probably be more expensive for girls than boys since girls tend to get their hair, nails, and makeup done. Guys usually rent their tuxedo while girls purchase their dresses, shoes, and accessories. Then there may be alteration fees for the clothing. Add in flowers, dinner, and a limo and these kids are getting a nicer date than I get these days.

Class Ring Expenses

I don’t believe in high school class rings! I know this may be an unpopular opinion. They hold sentimental value for many and are easily customizable to highlight your child’s high school memories, but I believe they are just a waste.

If your child attends college, they aren’t going to be sporting their high school clothing or accessories. After being worn for a short time during their senior year, those rings will likely collect dust at the bottom of a drawer or a jewelry box. I chose to not get one and don’t regret that decision, but if my child decides they really want one then we’ll have to add it to the budget discussion.

I also never hung up my high school diploma so I never needed a frame. But I did hang my college one!

Do you really want it?

The point is to really look at each of these optional expenses with your child and be realistic. Does your senior even want the item? Or is there peer pressure to get it? They don’t have to get something just because everyone else is getting it. The opposite holds true too, if they really want something.

Savings Options

Don’t forget to look for unconventional ways for things. Maybe your child doesn’t care to take senior pictures (beyond the obligatory yearbook photo), but you do. Hiring a photographer or using a studio can have drastically different costs. If that is out of reach there’s always taking them yourself or finding a photographer doing a model call. Often, you’ll only pay for the pictures themselves or a minimal fee if you agree to be a model for their portfolio.

Include your child

Be sure to include your child in these decisions. It’s a great opportunity for them to practice budgeting and planning for expenses. You could budget $75 dollars for a class ring and if they want a more expensive one then they can pay the difference themselves.

Personally, once my oldest is in high school we’ll start putting a small amount of money aside each month. Then, as we close in on senior year, we’ll jointly decide how to spend that money.

Thoughts from a Recent Grad

Donald has been in college for a year. Here are some of his reflections on his senior year.

“My Senior year experience was way different than I expected. I had planned on taking an extremely light course load and getting a full-time job somewhere working about 20-30 hours a week. As it turned out, my courses required a lot more time and effort than I thought, and I couldn’t find a job that I thought would work out for me, so I ended up with a lot of work and no money. What money I did have was used very sparingly.

I didn’t get a class ring or class jacket because I knew I wouldn’t really wear them, but I did pay for a few smaller trips and a larger one to Washington, DC. The trips were absolutely worth it! Experiences would be worth a lot more than anything else, so I happily coughed up the money. I spent a little bit on smaller things like nights out with friends for the same reason. I also spent some money on silly little things because it made for fun moments!

For Christmas, I bought a coffee maker and some coffee for my first period class to use because there were only seven of us and most everyone was a coffee person. I think the whole setup was about $35, but the fun we had with it was absolutely priceless! In short, if you’re unsure about buying a material item in your Senior year, don’t do it. Save the money for the moments you have with the people that matter.”

Be Frugal

Navigating the realm of your senior year high school expenses is a pivotal lesson in financial acumen. Before making purchases, pause and think about if you even want it—a sage strategy to curtail impulse spending. Look for budget saving opportunities that often hide in plain sight, but remember, frugality doesn’t equate to deprivation.

Allocate resources where they matter most by doing what’s genuinely meaningful to you. What expenses would you add to this list or surprise you the most? Have you found a creative way to pay for any of these expenses? What did you really care about but your child didn’t?

Thanks to Karina Moretz, Associate Advisor for this post. Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. We serve young adults and working families by providing personal financial planning and asset management for a simple fee. www.pathfinderplanningllc.com

The post Navigating Senior Year of High School Expenses appeared first on Pathfinder Planning.

Not long ago, you would have one or all of the Big Three: Phone, Cable, & Internet. If you wanted to lower your cable bill you usually had two or three tier options to choose from, so it was rather easy to choose your offering.  

As streaming services became more popular, many customers ditched cable and satellite services in order to save money without sacrificing their favorite shows. The power to watch only what you wanted when you wanted was amazing and people became HOOKED on entertainment freedom.

Even if you subscribed to multiple streaming services, you were most likely paying less than cable costs at that time.

Consumers began to “Cut the Cord” as a way to save money while still enjoying their favorite shows. As demand increased, more companies and individual networks began to offer streaming services.

As the streaming field decoupled cable and satellite companies from entertainment networks, subscribing to your favorite shows became more complex. Many shows became exclusive to certain streaming platforms. You may have begun paying for services with other channels that overlapped another service just so you could see your favorite shows. Additionally, networks began producing their own shows. The industry that was dominated by the traditionally free networks ABC, CBS, and NBC, now encountered competition from tech upstarts. 

Pretty soon, what was a way to have television entertainment for a low price became more complex than and more expensive. 

Evaluate Your Entertainment Needs

So, do you have any idea of all the services you are subscribed to? What are you paying in subscription streaming fees? Can you list them all right now? Did you forget any? Don’t worry, I did when I worked on this.

I KNOW I have two subscriptions through Amazon and I couldn’t tell you what they are. It’s on auto pay and every month I see “Amazon Prime Payments” come through and I tell myself to go figure out what it is and cancel it and then…..the next month comes and I do the same thing. Over and over. 

If this sounds like you, then it’s time to take stock of what you are actually paying for.

First, make a list of what services are important to you. If you NEED Netflix, then keep it on your list. If Hulu and Sling have overlapping channels, maybe you don’t need both. 

Now that you know what you need, let’s compare what you actually have. 

Make A List of Current Services

Make a list of ALL of the streaming subscription services you have and what the monthly cost is. If you pay annually, like with Amazon Prime, divide that by 12 to get the monthly amount. Add them all up and see what your total is. 

The challenge here is finding all the services. Some of them may be charged to your Amazon card, which we know is very vague in description. Some may go directly to your checking account and others may be on a different credit card. 

Now look at that total and that’s how much money you spend every month on streaming subscription services. 

Have a hard time remembering all your subscriptions? Try Rocket Money. I used the free version. You can “choose custom amount” and select zero dollars for their free version. You won’t have access to all the features of a paid account, but you could choose the option for the 7 day free trial (just don’t forget to cancel!). 

I linked my banking accounts and was able to see some of the subscription services I have outside of Amazon and when they are due each month. 

Television/Movies:

Netflix-  $19.99

Amazon Prime-  $11.60  (139 annually)

Disney + –     $6.70 (80 annually)

Streaming 1-  $4.99 (PBS Kids)

Streaming 2-   $5.99 (Shudder)

Amazon kids+ –   $4.99 (saw I can switch to annual payment of $48/year) 

Music:

Pandora-  Free Version

Books:

Kindle Unlimited – 9.99

Gaming:

Prodigy- $6.25  (75 annually)

X-Box Game Pass- $5.00 ($60 annually)

Cloud Storage Fees:

Google One 19.99 annually ($1.67 monthly)

Total entertainment streaming subscriptions: $77.17 monthly cost. There’s no magic number to say if your total subscription streaming is “good”. As long as you can afford it and use it then it’s not a waste. 

Make Decisions

I love Amazon and I have no plans of getting rid of it anytime soon. The two-day shipping and videos are used quite frequently in my home. Amazon also makes it easy to subscribe to other streaming networks through Prime Video. But, back to my mission to cancel those pesky unused streaming subscriptions. 

I logged into my Amazon account and looked under Account & Lists → Memberships & Subscriptions and I could see all my subscriptions I have through Amazon as well as the monthly amount and due date. I even found that I could save money on one subscription by switching to annual payment instead of monthly. Click, click, save! 

If you find yourself looking to save money, here are three ways to save on streaming subscriptions if you really don’t want to cancel them. 

Share Account

Some streaming subscriptions allow shared accounts, some don’t. Just make sure you follow the rules for each provider. You could split the cost, or if the person is amazingly awesome, they may let you have a log in for free!!!

Pro: saves money. Con: need to know someone willing to share.

Ladder your streaming subscriptions

Instead of paying for one all year long, maybe you pay for it for a couple months, get all your binging of your shows done for the year, and then cancel while subscribing to a different provider for a couple months. 

Pro: saves money. Con: You may hear spoilers before you can watch a show.

Bundle subscriptions 

Some streaming subscribers, like Disney+ offer bundle deals giving you access to multiple platforms for a discounted price.

Pro: Saves money. Con: You may not use platforms in the bundle.

Start Saving

Saving money on subscriptions and streaming services requires some planning and research. By evaluating your needs, sharing accounts, looking for deals, as well as considering bundled packages and comparing to cable, you can  make informed decisions and save money on your entertainment expenses. It’s important to weigh the costs and benefits before making the switch to streaming services to be sure it’s right for you. And for your budget.

Thanks to Karina Moretz, Associate Advisor for this post. Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. We serve young adults and working families by providing personal financial planning and asset management for a simple fee. www.pathfinderplanningllc.com

The post Tackle and Tame Your Tech Budget appeared first on Pathfinder Planning.

More good news – with some smart planning and a few money-saving tips, you can enjoy a memorable summer vacation without breaking the bank. Let’s explore some effective strategies to help you save money during your summer getaway.

Plan and Book Early

One of the best ways to save money on your summer vacation is to plan and book early. Many airlines, hotels, and travel agencies offer early bird discounts or special promotions for those who book well in advance. By securing your flights and accommodations early, you can often take advantage of lower prices and have a wider selection of options.

When you wait to book flights, you may find the costs are more expensive. This is because so many last minute bookings are business travelers who are not as price sensitive as families.

Be Flexible with Travel Dates

Flexibility with your travel dates can lead to significant savings. Consider traveling during the shoulder season, which is the period just before or after peak tourist season. Prices for flights and accommodations tend to be lower during these times, allowing you to enjoy the same destinations at a fraction of the cost. Additionally, midweek flights and departures on less popular days can also help you snag better deals.

Embrace Alternative Accommodation

While hotels are a popular choice for vacations, they can be quite expensive, especially during peak season. Explore alternative accommodation options like vacation rentals, hostels, or even camping. Websites and apps like Airbnb and VRBO provide a wide range of affordable alternatives, often with additional amenities like kitchen facilities, which can help you save on dining expenses.

One way that we have discovered to save money on vacations is by searching Airbnb or VRBO, and then searching for the property to see if it is listed on any other site, or directly through the rental managers website. You can also message the “host” on Airbnb or VRBO and try to negotiate rates. They will sometimes offer a discount, allow you to book directly and save the hundreds in extra fees and charges through those websites, or both.

Opt for Off-Beat Destinations

Instead of heading to the most popular and crowded tourist destinations, consider exploring off-beat or lesser-known locations. These places often offer unique experiences, lower costs, and a chance to immerse yourself in local culture. Do some research, seek recommendations, and discover hidden gems that can provide an unforgettable vacation while being kinder to your wallet. Smaller cities and quieter beaches may offer better deals.

Pack Smart

Packing smart can save you money on your summer vacation. Remember to pack essential items such as sunscreen, toiletries, and medications to avoid expensive purchases at your destination. If you’re traveling by air, pack light to avoid excess baggage fees. Additionally, consider bringing reusable water bottles and snacks for the journey to save on overpriced airport or convenience store purchases.

Remember the 80/20 rule – you don’t need as many clothes as you think. Remember that you an always do a load of laundry while on the road.

Explore Free and Low-Cost Activities

Research the free or low-cost activities available at your destination. Many cities offer free walking tours, public parks, museums with discounted entry fees on specific days, and community events. Take advantage of these options to enjoy local attractions without spending a fortune. You can also consider outdoor activities like hiking, swimming, or picnicking, which are often budget-friendly and allow you to soak in nature’s beauty.

National Parks are classic family getaways. If you are visiting several during the year, consider the US Park Pass. It’s a great deal for your whole family as daily entrance fees can add up. They offer passes for Seniors, Military, and those with permanent disabilities. You can get a free pass the year your child is in 4th Grade as well.

Go!

Planning a summer vacation doesn’t have to drain your bank account. By implementing these money-saving tips, you can make the most of your summer getaway while keeping your budget intact. Remember to plan ahead, be flexible, and explore alternative options to find the best deals. With a little bit of creativity and resourcefulness, you can enjoy a fantastic vacation filled with lifelong memories without the financial burden.

Thanks to Aaron Salmon, CFP®, Director of Investment Strategies for this post. Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. We serve young adults and working families by providing personal financial planning and asset management for a simple fee. www.pathfinderplanningllc.com

The post Top Money-Saving Tips for Summer Vacation Planning appeared first on Pathfinder Planning.

The Purpose of Maintenance Funds

There are three main assets that require ongoing maintenance for most families:

1. Home
2. Vehicles
3. Health

Everything we own requires upkeep. None of our assets just go on and on without a few tune-ups along the way — our bodies and material possessions are no exception. People require doctor appointments and dental cleanings, cars need oil changes and tires, and houses need painting and repairs.

Taking care of your belongings helps extend their lifespan and minimizes the total amount of money you’ll spend in the long run. The challenge is, maintenance does add up and if you’re unprepared your wallet can take a big hit.

Should I Use Emergency Funds?

By definition, maintenance is not an emergency. You should expect maintenance. Emergencies are completely unexpected. The challenge for maintenance is that the timing of the expenses is unknown. Think of these as non-monthly expenses. You should not use your emergency fund to deal with these on-going repairs.

Going into credit card debt is another no-go. It can be way too expensive. However, ignoring maintenance altogether only means that eventually, you’ll be looking at a much higher bill when something breaks completely.

You know the saying — when it rains it pours. You can expect to need new tires at the same time a hailstorm dents your roof which is also exactly when your son breaks his finger. When this happens, life will feel like an emergency because things are piling up. But these are all repairs and ailments that can be planned for. When you plan for these non-monthly expenses, you will fee more confident that you can pay them so they don’t become emergencies.

Solution: Maintenance Fund

So what do you do if you want to keep your car running well, your household operating smoothly, and still manage your money well?  The answer is: a maintenance savings fund. Think of it as an emergency fund for your ‘things’ — making all of those repairs easier to afford.

We tend to focus and spend our money on what’s right in front of our face, rather than think long term. Upkeep requires longer term thinking, so we need a system for creating this fund.

The easiest way to start is to incorporate regular, automated savings into your budget. Whether you regularly save $10 or $100 a month, you will have money set aside specifically for these expected but untimely expenses.

Have you ever started a workout regimen after a few weeks, months, or even years (no judgement here…) of little-to-no physical activity? How did you feel? Tired, sore, and ready to give up, right? I’ve been there more times than I care to count!

Funny thing, though. After a few weeks of getting back into an exercise routine, you start to feel energized, the pain subsides, and you become motivated and excited to stay on track. That’s because you have moved from starting at square one to maintaining. The same thing happens when you begin saving. It becomes a natural part of your budget and easier over time.

How Much Should I Save?

By now you’re probably thinking, “okay, Mom…I got it! I NEED a maintenance fund. But how much should I save and keep in there?”

While there is no hard and fast rule, here are some numbers that I have found that work.

For your home, you first want to have the amount of your homeowner’s insurance deductible on hand. If your deductible is $500, start with that much. If it is $1000, begin there. After that, save approximately 10 percent of your monthly mortgage payment into a high-yield savings account. For example, if your mortgage payment is $1,000, aim to put somewhere around $100 per month into your maintenance fund. If you are still working on your budget and don’t quite have that much, that’s OK. Some is better than none.

For your cars and vehicles, similar rules apply. Keep your deductible amount in the bank and save about 10% of your monthly payment amount. If you are not making car payments, then consider saving what would be a car payment. By saving $300 0r $500 a month, you will have funds available for major repairs or to purchase a new car in the future. Think of it as paying yourself instead of having to take a loan.

Medical expenses can be tricky, but a great place to begin is by having your maximum out of pocket expense amount on hand. Check your medical insurance policy. If your maximum out of pocket expense is $5000, that is your starting point. You can hold these funds in a tax-advantaged Health Savings Account, or in a regular savings account at your bank.

Chances are you won’t need to dip into these fund often, but the idea is to grow the balance over time and continue replacing funds as they are used. When something breaks, needs to be repaired, or even replaced, the money will be readily available and won’t affect the rest of your budget.

How Maintenance Funds Help Preserve Your Assets

This isn’t just some theoretical advice that I’m trying to sell you on because as a financial advisor I’m supposed to. No, we actually live this!

Here are some examples of how we have used our Maintenance funds. We purchased a NEW 2000 Ford Explorer back in, well, 1999. It was the first new car either of us ever bought. Over nearly two decades, we put money into maintaining this car, and we extended its life with us. I have to say, we loved this car, however, with over 234K miles, and doors that didn’t quite work the way they should, we weren’t sure that we could fix the power issue it was having. We finally had to let it go.

So, our $30K car lasted 17 years for an annual cost of $1764 per year, plus maintenance.

We needed new windows at the same time my son was impaled with a stake through his nose. While I’m not excited about the bills that I know are coming, I also am not afraid of them since we have funds set aside for incidents like these. (Maybe if you have boys, you will want to consider a larger fund.)

The Big Takeaway

Americans tend to have small savings accounts. A report from the Federal Reserve reveals that 70% of Americans would use cash, savings, or credit cards to cover an unexpected $400 expense. 35% would have difficulty covering this expense.

Here’s your big takeaway: if you have an expensive item, be sure to budget for its upkeep.

At a minimum, a maintenance fund can help you have enough money on hand to pay for the annual upkeep your life requires. Not to mention, it also keeps you out of debt, provides peace of mind, and creates a level of confidence that you won’t be caught short handed.

So tell us: do you have a maintenance fund? If not, what’s getting in your way?

Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.

The post How to Create Your “Oh Crap” Maintenance Fund appeared first on Pathfinder Planning.

My Eat at Home Experience

Your family and your budget love home cooked meals.

Growing up as one of four siblings, my parents didn’t have a lot of money to go around. That meant we rarely ever went out to eat. In fact, we often ate the same meals, on the same days — every week!

The regularity of the meals was so deeply ingrained in my mind, to this day, I can still recite what we ate each day of the week:

• Monday: Meatloaf
• Tuesday: Shake ‘n Bake BBQ chicken
• Wednesday: Leftovers
• Thursday: Hamburgers
• Friday: Libby Hill Seafood Platter (we all shared!)
• Saturday: Spaghetti
• Sunday: Chipped beef

Fortunately, when company came over my parents modified the regular menu and we had lasagna. And for the holidays, we had turkey and/or ham and all the fixins’ at my grandmother’s house.

While our regular meals may have been boring, we never went hungry.

Start Your Food Planning

It’s no secret that making your own meals instead of eating out will save you money. But with a family’s busy busy schedule, it’s difficult to make it all happen — despite your most frugal intentions. Kids (and adults) don’t want the same boring meals, but the convenience of eating out on a regular basis definitely increases expenses. So, what’s a person to do?

Here are the five steps I recommend to get started making your dinners a success.

1. Inventory Your Food
2. Choose Your Recipes
3. Create a Monthly Food Plan
4. Grocery Shop Weekly
5. Prep Daily

To help you with this process, I’m including some resources to help you get your meals organized.

Inventory Your Food

How many times do you go to the grocery store and buy lots of food that you ‘think’ you will eat? What often happens is that we end up with a pantry full of boxes and cans and a refrigerator with spoiled pork chops and wilted cilantro. This is definitely a budget buster.

To avoid wasting food, you should plan around what you already have available. Taking inventory of your pantry, freezer, and refrigerator is the first place to start.

Start With the Pantry

Take everything out of your pantry and set it on the counter so you can see it all. Next, start sorting the food into categories. You can pick your own, but here are some ideas:

• Baking Items
• Spices
• Dressings and Sauces
• Vegetables and Fruits
• Pasta and Rice
• Cereal and Breakfast
• Cookies and Snacks

As you sort, be sure the items are in date. Otherwise, throw them out. Also, if you see food that you know you won’t eat and is still in date, consider donating it to your local food pantry.

Now, make a list of what you are keeping. It doesn’t have to be perfect or detailed – just enough to give you an idea of what you have. For example, you might list: Beans – 3 cans, Pasta – 4 boxes. That’s good enough.

Check Your Freezer

Next, inventory your Freezer. This may be challenging since everything is cold and you want to work fast. Recruit your kids or a partner to help with this task.

Follow the same process here: take everything out, then sort. Be sure everything has a label. Toss anything that is freezer burned. Make a list, then put everything back so you can find it later. Knowing what you have will help you save money and budget better when you start planning your meals.

Refrigerator Round Up

I save the refrigerator until last since it has the most turnover. This is always a big place to find savings. By keeping only what you use and not buying things you don’t need, you’ll keep your budget in check. Once again, use the same process. Remove the food. Sort. Toss. Wipe off the shelves. Replace items. Done.

Choose Your Recipes

Despite what you might see on the Food Network, putting together a decent meal doesn’t have to involve hours in the kitchen or the purchase of fancy ingredients that you’ll probably only use once. Instead, you can prepare simple dishes that your family will love by finding recipes that don’t require more than a handful of ingredients.

Family Favorites

Don’t worry about breakfast and lunch for now. Start by asking your family to list their favorite dinner meals. These may be traditional comfort foods, family recipes, or simple Pinterest ideas.

We created a binder with our favorites. I put a label on the binder that I thought said Everyday Meals, but I misspelled it. Now we call them Veryday Meals. You can incorporate your own favorite recipes into your regular rotation.

Your Crock Pot Companion

Some of my all-time favorite recipes are made in the crock pot. So simple, yet so filling!

A quick Google search of crock pot recipes will uncover endless possibilities. For bonus points, search based on what you have available in your fridge, freezer, or pantry. For example, if you have chicken breast in your freezer and cream of mushroom soup in the pantry, search for crock pot recipes with those ingredients and see what options are available.

Chances are, you won’t need to buy much else and the result will produce one — possibly two — meals for that week. Your budget will definitely thank you for this.

The Freezer is Your Friend

Some of my other favorite recipes are freezer meals. These are great for families that are constantly on the go and don’t have the option to fully cook meals in the evening. You simply prepare your fresh meal ingredients in advance and pop it in the freezer. Some of these will end up in the crock pot while others are great for the stove or oven.

Remember to defrost your meal in the refrigerator overnight. You’ll be able to cook a healthy dinner in short order. If you can find several easy recipes with similar ingredients, you can save money by buying in bulk and save time by preparing them all at the same time.

This is a great way to get together with your friends, too. Have everyone choose one recipe and bring enough ingredients for everyone. So, if there are four of you, bring enough ingredients for four family meals. Some meals will use the same ingredients, such as dried spices, so just bring one bottle and everyone can share. Choose the house with the biggest kitchen, or the best party space, then get together. I like to have everyone rotate stations so they can customize their meals. For example, if the recipe calls for onions, but your family doesn’t like onions, just skip it. Besides having fun and saving money, everyone will leave with four different meals.

Create a Monthly Food Plan

How many times have you left work, taken the kids to and from their activities, only to get home and realize that you don’t have anything prepared for dinner. It happens to me more times than I care to count and every time it has been due to poor planning.

Meal planning is important for a number of reasons. First, by knowing the meals for the week, you can prepare a shopping list BEFORE you head to the grocery store. Having a list is proven to help you spend less money than if you went shopping with wide eyes and an empty stomach. In addition, by determining what meals you’re making and when, you can decide what to buy in bulk and figure out creative ways to use the leftovers in future meals. Win for food /Win for your budget!

Dinner Planning

To help you get started, here’s the Monthly Dinner Planner that I use. In less than 10 minutes, you can map out a month worth of dinner meals! Here’s how to use it effectively.

• Fill in the dates for the month. Check your meal planning calendar against your regular calendar, and write in any planned activities. You will want super simple meals on these evenings.
• Categorize each column. Working down each day of the week, give each column a category. Here’s how it works in my house: Monday night is a hamburger/beef meal. Tuesday is a chicken meal. Wednesday is vegetarian. Thursday is pork dinner and Friday is seafood. I leave the weekends open since they are so unpredictable, but you can schedule them with anything you want. Working down each column allows you to come up with easy meals while giving you variety during the month, preventing you from serving spaghetti six times in two weeks.
• List a dinner for each night. Use your family’s easy, go-to recipes during the week. Continue working down each column. For example, you might have Meatloaf, Manwich, Beef Tips, and Tacos on the Monday nights since these are all beef meals.
• Add variety. Change things up to make the categories work for you. Consider having ‘breakfast for dinner’ one night a month. Add in leftover night. Make a pasta night. Be sure to note any evenings where you are pressed for time because of schedules. You can make a batch of chicken nuggets for a quick dinner on the go.

Other Meals

If you are super organized, you may decide to create a menu planner for breakfast and lunch. I skip this as I’ve found that we eat the same thing during the week for breakfast. The kids eat lunch at school and I can always have a salad or sandwich. These meals don’t take as much prep as dinner.

Grocery Shop Weekly

Now that your Dinner Planner is complete, work across each week to prepare your shopping list and shop for one week at a time. For example, let’s say our dinners for the week are: Meatloaf, BBQ Chicken, Pintos and Cornbread, Ham Steaks, and Fish and Chips.

Shopping on a regular weekly basis gives you only the food you need, helping avoid waste and making the most of your budget.

Shopping List

This Shopping List template will help you on your next grocery store trip. The thing I really like about this list is that it is categorized by departments so you don’t forget something and have to backtrack through the whole store. It’s definitely a time saver.

Based on your week of dinners, you now know which recipes to use and what you need to purchase. Let’s say you already have dried Pinto Beans in the pantry and Ham Steaks in the freezer. Great! You have have much of what you need for two meals, so your weekly food budget is already ahead.

Grocery Store Ads

Each week, usually on Wednesdays, grocery stores publish the sale items for the week. Let’s say your see that chicken thighs are on sale as well as potato tots. Now, you have two more items for your weekly shopping that can save you money.

Suppose you see that SteakUmms are on sale as well. You decide to pick them up as this makes an easy go-to dinner when you are busy. Think of this as a back-up meal. Now, you have an item in your freezer that you can use when your schedule changes.

Sidenote: If you are an avid couponer, which is super budget friendly, be sure to consider them when preparing your shopping list. If they work for you, please do use them and think how to incorporate the items into your meal plan!

Buying in Bulk

Buying in bulk works well when you have a purpose. Freezer meals are a great way to use 10 pounds of hamburger or 24 chicken breasts. Just be careful not to get carried away and buy food that looks good, but doesn’t support your meal planning. Overspending on bulk items doesn’t help your budget if you don’t use the food.

And don’t forget to close the freezer door! I can’t count the number of times we have had to throw everything out because we left the door open. This is a huge setback.

Prep Daily

When it comes to cooking at home, preparation is the name of the game. In the same way that we discussed meal planning in the previous section, budgeting your time when it comes to the actual cooking of the meal is equally — if not more — important.

A good place to start is by preparing anything you can ahead of when you’re actually going to cook. I like to use Sunday afternoons to do this when I can. That means if the weekly meal plan involves chopping vegetables, or combining ingredients, I often do the work all at one time. This cuts down on the time I actually spend cooking in the evening. Minimizing prep time allows the chance to sit and enjoy the meal with family.

Speaking of family, cooking is also a great time to involve the family. Teach your kids how to set the table, pour drinks, stir the pots, and do the dishes. While a little help is always welcomed, perhaps the most important takeaway from all of this is that once you begin taking the time to plan your meals, menu and shopping, you will find that you spend less time at the store and more time with your family.

And there’s no doubt, you will be thankful for both.

Pamela J. Horack, CFP® of Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.

The post Five Easy Steps to Tame Your Food Budget appeared first on Pathfinder Planning.

Blueprint for the Financial Planning Tower

The idea for the tower came as I started my financial planning firm. I began sharing with my friends my newfound career shift from stay-at-home-mom. I would say “I’m a financial planner” and they would respond, “Oh, so you sell insurance.”

No, no, no. That wasn’t right at all. I had to find a way to explain what financial planning was. So I began reading, researching and drawing.

Armed with background information from the likes of the Bible, the Certified Financial PlannerTM board, and lots of books and online searches, this idea came to me. Every financial group seemed to have a pyramid type shape, which seemed  to be a good place to start. The images I found were very focused on investing, which is only a piece of the puzzle, and I wanted to cover all aspects of financial planning. 

Two other pyramid shaped concepts came to mind. First, Abraham Maslow’s hierarchy of needs which explains how humans are motivated. Second was the Food Pyramid. I know that is now passé, but it still seemed an appropriate metaphor.

Should I call it a pyramid? Nope – sounds too much like Bernie Madoff and a pyramid scheme where people lose money. A tower sounds better. Towers are strong and sturdy and something to be proud of when complete. After much introspection (because that’s what introverts do) I developed the concept of a Financial Tower.

Level 1 – Financial Planning Tower Basics

Maslow’s hierarchy of needs begins with Physiological needs. Humans cannot really grow beyond this level until these needs are met. For example, if you are hungry, it’s difficult to focus on taking care of your children. You have to meet this basic need first.

Similarly, grains at the base of the Food Pyramid were thought to be the foundation for a solid diet.

Your budget is the foundation for all of your financial planning and makes up Level 1 of Your Financial Planning Tower.

Income

The base level of the tower begins with your Income. Remember when you were a kid and your mom gave you an allowance? Or maybe your grandmother gave you some money for your birthday. Maybe you earned money for babysitting or lawn work. Regardless of where it comes from, income is where everyone’s budget begins.

Expenses

Next comes your Expenses. Once you have some income, you’ll want to spend it. Notice that your expenses block is smaller than your income block. When your expenses are less than your income, you’ll have money to set aside in savings for an Emergency Fund. 

Emergency Fund

Your Emergency Fund is a critical corner of support for your Financial Planning Tower. Not only does this savings allow you to have money for unexpected events, it builds the habit of setting aside money. It trains you to save for a rainy day. Conventional wisdom says to have between 3 to 6 months worth of expenses in savings, but that number may be more or less, depending on other factors. Your job security, amount of debt, income, and other investment resources also factor into the right amount.

Notice that if you don’t have this block of your tower complete, the pieces above it are likely to fall.

Level 1 is the place where everyone starts budgeting. Just like Maslow’s concept of your Physiological needs, you have to have a budget first. If you have never created a budget, you still have one, it’s just dysfunctional. 

Just like the complex carbohydrates this level represents, your budget provides lots of energy, but little nutrition. It’s essential to your needs and always in motion, but doesn’t really grow your overall wealth unless you use it wisely.

As a planner, I want to be sure your budget works.

Level 2 – Financial Planning Tower Safety Needs

Maslow’s second level is Safety. Until this need is satisfied, more or less, we can move to the next level. In  financial planning terms, this level of Your Financial Planning Tower is critical. Your safety needs protect the things you have and people you love, providing a strong second level for your tower. Financial planning around risk solves everyday problems.

Fruits and Vegetables

Families need more savings for specific spending items. You know when you need new tires on the car? You may not want to purchase them, but it certainly feels better to use money that you have instead of putting them on the credit card to pay another day. That’s why these extra savings categories are fruits. Everyone loves fruit.

We also need insurance and estate planning. These are your vegetables because nobody likes them, but you have to have them because they are good for you. 

Operations and Maintenance Funds

The first block is your Operations and Maintenance Funds. (By the way – if anyone comes up with a better name, please let me know!)

Anytime you own something that’s very large, you will have to take care of it. And that costs money. The three main things you need to maintain are:

• Home
• Cars / Vehicles
• Health

There will be times in life when you will need money to pay large expenses. For example, you may need a new roof for your home. Or you may need tires for your car. Maybe you need to meet a large medical deductible. These expenses are not in your normal budget. You should set aside money so that when they happen, you’ll be able to pay for them without having to dip into credit. 

Long Term Goals

Often we have specific goals we want to fund. For example, maybe you are saving for a trip to Europe, a wedding, or you are looking to buy a new car within the next few years. These are goals that you can budget and save for on a regular monthly basis.

That trip to Europe for the family may cost $10K. So, if you save a regular amount each month, plus any bonuses you may receive, you may decide that you can take that trip in about two years. That’s a powerful goal that the whole family can get behind!

Insurance

Managing risk helps protect from catastrophic hazards that could bankrupt your financial plan. Insurance provides a means to protect your family if you pass away. And it replaces your income incase you cannot work.

When planning, you will want to look at your health and property needs to protect your larger assets.

Reviewing your life insurance and disability insurance are a means of protecting your income. I’ve seen lots of plans with too little in disability and too much in life insurance. 

Long-term care is a category unto itself. You may or may not need this type of insurance, but it may be difficult to make this decision without some additional expertise.

A proper needs analysis will help you decide the right amount of insurance as well as the right type of policy to purchase.

Estate Planning

Estate planning is not just a concept for rich people. It’s the surest way to protect your family if you aren’t there.

Estate planning is the only place that you can designate someone to be the guardian of your children or manage funds if you’re incapacitated. You do not want to leave these decisions to the laws of  your state.

This is not just a need for when you die – it’s also for while you are alive. If you are incapacitated, you want to be sure you have the right people making your health and financial decisions.

As our dependence on technology grows, your digital accounts need attention. Uncle Ben may be a great executor when dealing with accounting paperwork, but Cousin Zach might be the best choice to manage your Facebook and Twitter accounts when you are not here.

Having instructions like these gives you the peace of mind you need to move to the next level.

Level 3 – Financial Planning Tower and Investing

Now that your first two levels are set, we move up to the fun stuff that everyone wants to talk about – retirement and investments. This is the traditional venue for financial planning.

Level 3 of the Financial Planning Tower is equivalent to Maslow’s Love and Belonging level. This is where we develop our sense of belonging and really begin to feel good about ourselves and others. The Food Pyramid expresses this level as Dairy and Meats. It’s much richer up here!

Retirement Funding

Everyone loves to talk about how well their 401(k) is doing when the market is up, and how terrible things are when markets are down. The top questions that I get revolve around when, where and how much is needed to retire.

Personally, I believe the government has made it extremely difficult for working families to save for retirement. It’s too complex! People have gazillions of questions about IRAs, Roth IRAs, 401(k)s and other retirement plans. Pension plans also get their fair share of concern. These plans are more common than you may think. In addition to teachers, police, firefighters and other state employees, many companies still offer pensions to employees.

And don’t get me started on Social Security, except to say that yes, I believe it will be there when you retire. 

Education Funding

Families look out for their children, so college saving runs a close second to retirement in terms of major goals. Unfortunately, we often wait too long to begin addressing this item, so parents seem panicked when they realize they only have two years to save.

When considering college, parents have many questions including:

• what is the viability of the student loan system?
• how do we effectively save?
• what is a 529 Plan and how does it work?
• can we afford the rising rate of education?

The rules around college often change with a new Presidential administration. We also need to consider if our children are ready for a four-years program. They may be better suited for two-year college, an apprenticeship or waiting and attending later. There are so many variables to address it can be overwhelming without some help.

Level 4 – Financial Planning Tower and Your Passion

Now that these three levels are covered, we move into what Maslow would call Esteem. Just like our body fat, our Esteem keeps us warm and happy. Level 4 of Your Financial Tower is your passion. While it is not directly related to money, this level is an emotional driver for all our goals.

We need to feel good about what we are doing in our life. We can be happy being an engineer, housewife, accountant, food server, or any number of careers, but often we are not. That may be because we haven’t done a good job building our tower. When we have not met our “deficiency needs”, as Maslow says, we have a difficult time being motivated.

When we are misspending and not saving, we always feel like we are behind the 8-ball. We feel like we can’t leave a job where we are unhappy because we have bills to pay and mouths to feed. We may feel trapped in a role that isn’t fulfilling because it doesn’t use our God given talents.

This is a time to rethink our purpose, maybe change old habits, and set new financial goals so we can shift from a job as an accountant to a passion of horse training. Or a food server to a bakery owner. Or a housewife to a financial planner.

Level 5 – Financial Planning Tower and Your Legacy

Level 5 of Your Financial Planning Tower is your Legacy. For us, that means our legacy – like Maslow’s self-actualization or the sugar on top. These are the things we leave behind.

This doesn’t necessarily mean the money we leave, although that is part of it. We’ve all heard the horror stories of debt-ridden people with nothing left for the kids. Families are then left to fight over the teapot.

Our legacy is truly how we are remembered when we are gone. Do you want to be remembered as someone who didn’t have much money, but was a great photographer who shared his work with everyone? Or would you rather be remembered as an overworked executive who didn’t have time for the kids?

Our legacy often has very little to do with our money.

In the Basement of the Financial Planning Tower

Now, if you look at Maslow’s tower, or the food pyramid, you’ll notice that that’s all there is. A few levels that build a triangle shape. However, in finance, we still have to deal with our debt.

I really had to think about this one, since there was no other comparable concept within the models I had. So I looked at my tower and decided that debt is just spending more money than we have, so it had to be an expense. But it couldn’t go up, so it had to go underneath our expenses. And down, and down.

Then, I thought what would it be like if we didn’t get the emotional support we need? And what if we didn’t get the food we need to survive? Well, that would be starvation, and that’s exactly what debt is.

When you continue to borrow money, your income goes to pay for expenses you couldn’t afford in the first place. You can never build your tower up because you are always busy filling in that hole. Debt robs us of the funds we need to build our tower, so we have to use it prudently and keep it under control. 

Construct Your Financial Planning Tower

After years of planning and telling the story of your Financial Planning Tower, I have seen it positively impact others. People often tell me that they never thought of planning that way, or that the image made so much sense to them.

Pathfinder Planning uses the Financial Planning Tower to help working families find gaps in their finances, fill them in, and continue building. Here are some examples of the successes our clients have had:

• Paid off $100K in debt
• Had disability insurance in place before a skiing accident
• Completed estate planning to accommodate an adult special needs child
• Rebalanced retirement accounts resulting in reduced investment fees and increased return projections
• Savings to support their family when the breadwinner lost their job during COVID
• Bought a second home
• Changed from a job to a dream before age 50

We understand how difficult it can be to address all your competing needs at once. The Financial Planning Tower gives you the structure you need to prioritize and achieve your goals. These concepts can and do work for our clients! They can work for you as well.

Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. We serve young adults and working families by providing personal financial planning and asset management for a simple fee. www.pathfinderplanningllc.com

The post Build Your Financial Planning Tower appeared first on Pathfinder Planning.

Just like your clothes, your budget needs to be tidied up periodically.

As a financial planner, I like having an organized budget. So, when I saw the show Tidying Up with Marie Kondo, it became my new guilty pleasure. I started wondering how her tidying concepts could apply to our finances.

Marie Kondo is a superstar in the world of organizing who has completely revolutionized the art of decluttering with her trademarked “KonMari Method”.

Her philosophy is simple: hold on to things that are dear to your heart while getting rid of those that no longer spark any joy.

As I binge-watched her transform messes into neatness, I started cleaning my closet. And cabinets. And my husband’s clothes.

As I saw the slow but methodical transformation of my own house, I began thinking how to transform budgeting with the KonMari concepts. 

Family Teamwork

For each show, I noticed how the entire family was involved in the cleanup. Each person became responsible for tidying their own items and finding things that gave them joy. The same rule should apply to your budget. 

On the show, Kondo begins each episode discussing the importance of answering the question: why do I want to do this in the first place? That is, ‘what is the underlying emotional reason for wanting to have a more organized home (or in our case, a more organized budget)? 

If you don’t know your “why,” you will probably never start. Even if you do begin, you’ll quit before realizing any meaningful results. 

Also, without knowing the “why,” family members have a difficult time getting excited. 

Everyone has to commit to the budgeting process. It doesn’t work if Mom is on board, but Dad isn’t. You have to work as a team.

Budget Your Ideal Lifestyle

Do you like scrambling to pay for unexpected expenses? Or making loan payments every month? Maybe you would rather spend time at the park, travel, or focus on your special hobby.

In her book “The Life Changing Magic of Tidying Up”, Kondo wrote: “The question of what you want to own is actually the question of how you want to live your life.”

Spend some time talking with your family about your values and your future. Is your ideal lifestyle reflected in your spending and money habits? If not, think about how you can align your finances with your ideal lifestyle.

Start with the vision of what your best life would look like. This will help you shift your mindset and shape the criteria for what brings joy to your world. Then, you can create a budget that supports that vision.

Budget By Category

We all have mental buckets or other means of categorizing our finances. You will want to address each of the three major categories individually: Cash Flow, Risk/Insurance, Investments. 

Focus on one category at a time. As a result, you’ll create an overarching picture of your current financial state. 

Follow the Right Order

As a continuation of the previous idea, when you make the decision to declutter your budget, make sure to do it slowly and follow the right order. Just like tidying has a specific order, so does budgeting. We begin with your Cash Flow. 

Income:

Are you making the most of your income potential? Do you take advantage of all your work benefits? Are you considering a side job? Are your savings and investments earning the most they can for you? These items are all part of your income.

Giving:

Whether you give to your church or another organization, decide what type of organizations you want to support and allocate that money first. In addition to making us feel good, studies show that giving is good for our health, promotes social connections and cooperation.

Savings:

I’m firmly convinced that regardless of stock market returns, saving on a consistent basis is the surest means of having money to meet your future goals. Allocate your savings before you spend so you’ll have money for a rainy day.

Debt:

Before you can truly experience joy, you must get rid of the things that hold you back. That means paying off your debt. It may take some time – no one gets into debt overnight, so you can’t get out of it overnight either. Set up a payment schedule and focus on getting loans and credit cards off of your books.

Fixed Expenses:

This is one of the most challenging areas of our budgets. Fixed expenses are difficult to change as we think we need them all. Ask yourself: Does this big house spark joy for us? Or does it feel like a weight to maintain it? Can we sell the car and buy a less expensive one? Addressing your fixed expenses may involve lifestyle changes, which is why everyone needs to be working together toward your family’s shared values.

Variable Expenses:

Now, you are ready to tackle the items that we often think of as budget busters: groceries and food, movies and entertainment, clothing, memberships and kid expenses. Examine each category and ask yourself: Does this item bring our family joy? Do we want to carry it into the future? Does this support our values? What would happen if we didn’t spend in this category?

By tackling one category at a time, you prevent budget overwhelm and allow yourself the time to see if your new budgeting strategies are actually working.

Does Your Budget Spark Joy?

Once my closet was neat and organized, I was able to keep it that way for a year! I like the way it looks and it’s so much easier to put things away. Clothes don’t get lost, and it makes me smile. Now, I have moved on to books (we have a lot!) and the boy’s rooms.

Look at your new budget. If you can smile, you have done it right. Continued budget maintenance will help move your family towards your ideal lifestyle.

Just as Marie Kondo’s tidying method is life-changing for the families she helps, addressing your cash flow (aka budget) can be transformative for your family. 

Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. We serve young adults and working families by providing personal financial planning and asset management for a simple fee. www.pathfinderplanningllc.com

The post Organize Your Budget with Kon-Mari appeared first on Pathfinder Planning.

Organizing Your Finances

2020 was a hot mess. Given that, you may be thinking about getting better organized in the new year. Your money is no different. Organizing your finances now will set you on the right track for the rest of the year.

How do you decide when and where to spend your money? Do you use a rational, well thought-out process? Is every dollar accounted for? Or do you just throw caution into the wind and go with what feels right?

Organize with Your Head or Heart

If you’re like most people, you probably do a little of both. Consider this: just about any decision that you’ve ever made likely falls under one of two categories. It is a logical decision backed up with emotion, or an emotional decision backed up with logic.

This means that you either make decisions primarily with your head or your heart. When organizing your finances, you need a lot of logic as well as some emotion.

Emotions are going to influence your decision making process no matter what. That’s just a part of life. The key is knowing how to identify those emotions. Then you determine how to effectively use them when evaluating financial decisions.

Let’s take a look at the head vs. heart dilemma in more detail and find a way to balance the two. This will help as you begin to organize your budget, savings and investments.

How Emotions Affect Your Organization

Our emotions are closely intertwined with our finances. There is really no way to keep them separate. Our choices are largely influenced by our emotional state. And our financial situation can have a huge impact on how we feel.

A perfect example of this is what happens when you have a bad day at work. Instead of coming to grips with the fact that bad days are normal, you head to Amazon in search of retail therapy.

According to a study published in the journal of Psychological Science by Harvard and Columbia University professors: people who are sad are willing to forgo greater future monetary gains in exchange for instant financial gratification. While I am just your Financial Mom — and not a noted Ivy League scholar — I can tell you with 100% certainty that by allowing an emotion to drive your financial decisions, you will end in debt and despair.

Buying something “new and shiny” gives us a temporary endorphin boost. But spending to numb stress away is never a good idea and does not help to organize your finances. A better financial move is to recognize the triggers that cause the stress that makes you want to shop. When you take the time to properly identify the cause of the stress, you are more likely to find a solution that doesn’t involve the swiping of your credit card.

How Logic Affects Your Organization

According to online educational resource, Boundless.com: Rational decision making is a multi-step process for making choices between alternatives. The process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight.

However, as we discussed earlier, making financial decisions independent of emotion is something that cannot really be controlled.

With this being the case, the logical response is to figure out how you can make better financial decisions regardless of your emotional state. Here are a few tips to help you channel your logical side when navigating these situations.

• Have a plan: From grocery shopping to retirement planning, it is important that you have a strategic plan for the uncertainties of life. Organizing your finances before emotions become a factor improves your chances of successful execution.
• Acknowledge your emotions: No matter how logical of a thinker you believe yourself to be, you need to acknowledge your emotions. This allows you the opportunity to think your way through decisions.
• Don’t stress about things you cannot control: We often stress about things that we cannot control. In order to overcome these feelings, you must learn to accept that there are some things that you cannot change and move on! Spending time obsessing over things out of your control won’t change the outcome.
• Sleep on it: When you’ve settled on a decision, don’t act immediately — instead, allow yourself a predetermined amount of time to reflect on it. This ‘grace period’ usually results in greater clarity and will either reinforce your decision or cause you to re-evaluate.
• Revisit your goals: Going back to the first point about having a plan. Always remain cognizant of the goal you are trying to reach. This is the reason you’re investing, saving, or paying down debt in the first place. Compare your final decision to your goals. How will the choice you are about to make affect the probability of achieving that goal? The answer will help you determine whether or not it is a logical option.

When I’m faced with a decision, I try to ask myself: What does your head say? And then I ask: What does your heart say? If they are in agreement, then it’s probably a good decision. If they are at odds, I try to go with my head. Common sense and rationality always seem to help me make good money decisions.

A good head and a good heart are always a formidable combination – Nelson Mandela

Now You Can Organize

Once you understand the “head vs. heart” debate, you can begin to organize your finances. Start by listing all of your checking, savings and retirement accounts. Then list other items you  own, such as a car or home. Now, list all of your debts. This includes a mortgage, credit cards and student loans.

Now think about how each of these accounts make you feel. For example, look at your savings account. Are you concerned that the balance is too low? That is an emotional response. Let’s turn this into a logical response. Change your thinking to: “Wow – I only have six weeks of emergency funds.” Instead of worrying about a low balance, you can now create an action plan to increase your savings.

Marie Kondo is an organization master! She wants you to find joy in the things you have. Organizing your accounts will help you budget better, set goals and then feel good about the work you have done.

How to Organize Your Finances

Pathfinder Planning offers a great way to arrange your accounts all in one place. You can Get Organized when you log in to Advizr, our planning software, and link your accounts online. Then, you can see everything in one place and keep track of your balances on a daily basis.

Recognizing your spending triggers is the key to understanding why we make the financial decisions we do. So the next time your head and heart are in conflict, go with the logical decision and trust that your heart will eventually fall into place. It might not be easy, but over time you will find it easier to make rational decisions — independent of your state of emotions.

Pathfinder Planning LLC provides personal financial planning advice and asset management for a simple fee to young adults and working families in North and South Carolina through group classes, one-on-one planning, and ongoing advice.

Your Financial Mom blog posts are not meant to be legal, accounting or other professional service advice. Content represents the opinion of the author only. Pathfinder Planning LLC is not responsible for the accuracy or validity of content contained in third-party comments.

The post How to Get Organized in 2021 appeared first on Pathfinder Planning.

In 2019, the average tax return was a little over $3,000 — which, no matter your income level — is nothing to sneeze at. I mean, an extra $3,000 added to your budget could cover a lot of shoes, that Peloton bike you’ve been eyeing, or even a weekend getaway that your family so desperately needs. 

But before you go on a shopping spree or otherwise splurge with your refund, you might want to consider some other options — like using that cash for home improvements or paying down your student loans. 

If you just received a big, fat tax return and don’t know what to do with it, here are my top three recommendations to put it to good use.

Sock it Away 

This is probably the single most important thing you can do to maintain strong financial health and prevent yourself from sliding into debt. Far too many of us don’t have a sufficient emergency fund. If your car breaks down, or you need to pay a large insurance co-payment, you need to have money on hand to do just that. 

Your emergency fund should contain 3 to 6 months of living expenses and should be held in an easily-accessible account, such as a savings account or a money-market account.

I’ll agree that this is the most boring thing that you can do with your tax return. But keep this research from the JP Morgan Chase Institute in mind. Research has found that the amount of cash you have in the bank is a more useful predictor of mortgage default than home equity is. People with three to four months of mortgage payments in the bank were far less likely to default than those with less than one month of payments.

Don’t be sidetracked by the fact that money in the bank doesn’t earn much, either. Remember – a bird in hand is worth two in the bush. Better to have the funds on hand than have to charge an unexpected expense and then pay interest while you wonder how to pay for it.

Bye-Bye Balance 

If you have enough in your emergency fund, consider using that tax return to pay off some credit card balances or other outstanding bills. 

In 2019, consumers spent an average of 10% of their disposable income on debt payments such as credit cards, car loans, student loans and other personal loans. Freeing up this money gives you breathing room to work on your other goals.

My two favorite ways to apply your tax return toward your debt are paying the highest interest rate loan first or paying the smallest balance first.

Paying off your highest-interest-rate debt will save you the most money mathematically. Paying off lots of little bills can be more satisfying than paying a large chunk on one bill, and it can simplify your monthly bill-paying process. This provides you with a psychological sense of victory that keeps you motivated to continue the process.

Both options will help you make significant progress toward eliminating your debt, so either one is a good choice.  

Home Sweet Home 

Once you are comfortable with some savings, and have the credit under control, do something good for yourself. 

For around $1,000 or less, you could make updates to your home that will improve your quality of life. You could repaint a room, fix a leaky faucet, buy a programmable thermostat, add new landscaping, or even pay someone to KonMari your stuff. 

These enhancements make your space more comfortable and functional for your family, and they add value to your home if you decide to sell it later.

The most important take-away here is to resist the urge to splurge first. We’re all familiar with the phrase, “treat yourself”. While it’s not a bad idea to spend money on yourself for fun here and there, it might not be the best way to spend your tax return. 

So, take a hard look at your finances and figure out what to do with your tax refund so it improves your financial standing — instead of staring blankly at your bank statement a few months from now wondering where the money went.

Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. For more information, visit www.pathfinderplanningllc.com. 

The post 3 Smart Ideas for Your Tax Refund appeared first on Pathfinder Planning.

As a planner, I like being organized. So, when I saw the Netflix show Tidying Up with Marie Kondo, like many of you — it became my new guilty pleasure. 

For those unfamiliar, Marie Kondo is a superstar in the world of organizing who has completely revolutionized the art of decluttering with her trademarked “KonMari Method”.

Her philosophy is simple: hold on to things that are dear to your heart while getting rid of those that no longer spark any joy.

As I binge-watched her transform messes into neatness, I started cleaning my closet. And cabinets. And my husband’s clothes.

As I saw the slow but methodical transformation of my own house, I started wondering how her tidying concepts could apply to our finances.

With that thinking, I thought it would be fun to take a look at the budgeting equivalent of Kon Mari. OK, so I have a weird sense of fun.

Let’s get started, shall we?

Commit Yourself to Budgeting

For each show, I noticed how the entire family was involved in the cleanup. Each person became responsible for tidying their own items and finding what gives them joy. The same rule should apply to your budget. 

On the show, Kondo begins each episode discussing the importance of answering the question: why do I want to do this in the first place? That is, ‘what is the underlying emotional reason for wanting to have a more organized home (or in our case, a more organized budget)? 

If you don’t know your “why,” you will probably never start. Even if you do begin, you’ll quit before realizing any meaningful results. 

Also, without knowing the “why,” family members have a difficult time getting excited. 

Everyone has to commit to the budgeting process. It doesn’t work if Mom is on board, but Dad isn’t. You have to work as a team.

Imagine Your Ideal Lifestyle

Do you like scrambling to pay for unexpected expenses? Or making loan payments every month? Maybe you would rather spend time at the park, travel or focus on your special hobby.

In her book “The Life Changing Magic of Tidying Up”, Kondo wrote: “The question of what you want to own is actually the question of how you want to live your life.”

So, spend some time talking about your values and your future. Does your spending and overall habits with money reflect your ideal lifestyle? If not, think about how you can align your finances with your ideal lifestyle.

Start with the vision of what your best financial life would look like to help shift your mindset and shape the criteria for what brings joy to your world. This will allow you to create a budget that supports that vision.

Tidy By Category

We all have mental buckets or other means of categorizing our finances. You will want to address each of the three major categories individually: Cash Flow, Risk/Insurance, Investments. 

Focus on one category at a time. As a result, you’ll create an overarching picture of your current financial state. 

Follow the Right Order

As a continuation of the previous idea, when you make the decision to declutter your budget, make sure to do it slowly and follow the right order. 

Just like tidying has a specific order, so does budgeting. We begin with your Cash Flow. 

Income: Are you making the most of your income potential? Do you take advantage of your work benefits? Are you considering a side job? Are your savings and investments earning the most they can for you? These items are all part of your income.

Giving: Whether you give to your church or another organization, decide what type of organizations you want to support and allocate that money first. In addition to making us feel good, studies show that giving is good for our health, promotes social connections and cooperation.

Savings: I’m firmly convinced that regardless of stock market returns, saving on a consistent basis is the surest means of having money to meet your future goals. Allocate your savings before you spend so you’ll have money for a rainy day.

Debt: Before you can truly experience joy, you must get rid of the things that hold you back. That means paying off your debt. It may take some time – no one gets into debt overnight, so you can’t get out of it overnight either. Set up a payment schedule and focus on getting loans and credit cards off of your books.

Fixed Expenses: This is one of the most challenging areas of our budgets. Fixed expenses are difficult to change as we think we need them all. Ask yourself: Does this big house spark joy for us? Or does it feel like a weight to maintain it? Do we need to sell the car and buy a less expensive one? Addressing your fixed expenses may involve lifestyle changes, which is why everyone needs to be working together toward your family’s shared values.

Variable Expenses: Now, you are ready to tackle the items that we often think of as budget busters: groceries and food, movies and entertainment, clothing, memberships and kid expenses. Examine each category and ask yourself: Does this item bring our family joy? Do we want to carry it into the future? Does this support our values? What would happen if we didn’t spend in this category?

By tackling one category at a time, you prevent budget overwhelm and allow yourself the time to see if your new budgeting strategies are actually working.

Does it Spark Joy?

Once my closet was neat and organized, I was able to keep it that way for a year! I like the way it looks and it’s so much easier to put things away. Clothes don’t get lost, and it makes me smile.

Look at your new budget and if you can smile, you have done it right. Continued budget maintenance will help move your family towards your ideal lifestyle.

Just as Marie Kondo’s tidying method is life-changing for the families she helps, addressing your cash flow can be transformative for your family. 

Pathfinder Planning LLC is a registered investment advisor in North and South Carolina. For more information, visit www.pathfinderplanningllc.com. 

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