There is no denying that the economy is bad, and that the current situation is taking its toll on many Americans. But does this mean your life has to stop? Does this mean you have to stay inside all day and save your money? Of course not. You can still have fun even if the economy is going through a rough patch. Believe it or not, vacationing on a budget is more than possible.

Some people don’t know the concept of a cheap vacation. They think the only way to have fun is to pay the first price they see, and spend, spend, spend when they reach their destination. Fortunately, this is far from the truth.

The following tips can make vacationing on a budget tons of fun:

1. Use the internet to search for deals. Sites such as Expedia.com, Kayak.com, and Tripadvisor.com are great for finding the best deals on airfare, lodging, and car rentals. To go along with this, many of these sites also offer vacation packages that are sure to save you some money. For instance, Expedia is in the process of pushing their “Winter Sale” packages which offer hotel and flight to many popular destinations for $278 per person.

2. Before you ever start planning your vacation you should first set your budget. Do you know how much money you can comfortably spend? Your budget should be set from the beginning so you don’t get in over your head. If possible, begin to plan and budget for your trip a couple months in advance. This will help to ensure an accurate and efficient process.

3. Meals can be expensive. Have you ever thought about packing food to take with you on vacation? This is an idea you don’t want to overlook. If you are driving this is a particularly good idea. To go along with this, once you reach your destination you should head for the grocery store instead of a five star restaurant. You may spend a lot of money on groceries, but the fact of the matter is that they can last you a long time.

4. Travel with others. Have you ever thought about asking another family to join you on vacation? By doing this you will cut your costs in half from the word go. Does it get any easier than that? When you vacation with another family you can save on everything from gas to lodging.

5. Don’t be married to one destination. Remember, not every vacation destination is as expensive as the next. For instance, if you live on the east coast of the United States it will be much less expensive to vacation in Myrtle Beach, South Carolina than Los Angeles, California. Not only is it closer to your home base, but once you arrive you will be able to save money as well. Even though you may be interested in taking your dream vacation now may not be the best time to do so. Instead, opt for destinations that are known to be more budget friendly.

6. Drive don’t fly. For many, the cost of airfare is the expense that breaks their budget. Why let this happen to you? There are bound to be many top notch vacation destinations within driving distance. And with gas prices lower than they have been in a while you can surely save a lot of money. For more information on gas prices and planning your trip visit GasBuddy.com.

7. Hotels can be expensive. If you really want to save money on lodging you should consider camping out. No matter where you are traveling, as long as the weather is warm you can opt for camping as opposed to spending hundreds or thousands of dollars on lodging. If you have your own equipment all you have to do is pay for the site which can be as little as a few bucks per night. For more information on campgrounds in the United States visit KOA.com.

8. When you arrive at your destination don’t feel obligated to spend money like most tourists. Instead, opt for free or cheap entertainment. There is nothing wrong with sitting on the beach or at the pool. Not only is this fun, but it will not cost you a dime. Of course, you may get the urge to scour the area and there is nothing wrong with this. Just make sure you opt for activities that fit your budget.

Now do you believe that vacationing on a budget is possible? The above tips and links are all you need to plan a vacation even when the economy is on a downswing and the so-called experts are telling you to tighten your belt.

Are you concerned about the federal budget? Are you aware that the deficit is closer than ever to spiraling out of control? At this time, the federal budget deficit is increasing at an extraordinary pace and has the potential to cause many other issues that you may or may not be aware of. Simply put, average Joe Americans are not the only people who have to worry about a budget. That being said, all Americans have to trust that the federal budget is under control. And right now this is very difficult to do.

Simply put, a federal budget deficit is when the government spends more than they receive in revenue; this is much like your personal budget only on a much bigger scale. Take for example the federal budget for fiscal year 2007. The deficit at the end of the fiscal year was $163 billion. While this is bad, it is nothing compared to the predicted deficit of $240 billion for 2008. On top of all this, it is important to realize that the United States Government is already facing debt of roughly $10.6 trillion. Now do you see why the country is in so much economic trouble?

Why should you be worried that things are going to get worse in 2009? While there is no way of knowing for sure what the federal budget deficit will be at the end of fiscal year 2009, you should have some concerns. When you look at the federal budget deficit on a big scale it is easy to see that the United States owes a lot of money to a lot of people. But since they always pay the money back, and are more or less the best customer in the world, there has yet to be a problem. But what would happen if somebody, another country, got nervous and requested their money right now? This could lead to widespread panic across the world, which would then trickle down and affect your personal finances.

Even though the government is taking steps towards eliminating some of this debt, they have no plans to totally eliminate the deficit. It is safe to say that the federal budget deficit will grow once again in 2009 despite the already weary economy.

Building a budget is easy enough for most people. Knowing how much money to allocate to each category can be a bit more tedious and complex. Your budget needs to make sense from a financial point of view, while also meeting all your personal needs.

There is no exact way of saying what the “ideal budget breakdown” is for you. After all, every consumer is unique. You earn more than some but not as much as others. The same is true for your expenses.

Of course, there are many estimates that you can follow when building your ideal budget. These estimates have long been used by financial experts, as well as those in the banking and investing industries.

Housing

How much of your income goes towards housing each month? Ideally, this number should be 30 percent or less. This is the figure that most lenders use when figuring out how much of a mortgage to qualify you for. So if you earn $10k per month your budget should not allow for more than $3k in housing expenses.

Taxes

Believe it or not, this is something that many people forget about. If taxes are taken out of your paycheck, which is the case for most people, you don’t have to spend too much time on this. But if you are self-employed it is definitely a portion of your budget that you don’t want to overlook. Generally speaking, 25 percent of your pay should be set aside or taken from each paycheck.

Living and Household Expenses

How much money do you need for living expenses? This differs greatly depending on where you live, your lifestyle, and much more. Living expenses includes your utility bills, car payment, gifts, entertainment money, food, and gasoline. And again, this may only be the tip of the iceberg for you. Your living and household expenses should not exceed 25 percent.

Savings

If you are not saving money there is something wrong with your budget. Most experts agree that saving 15 percent of your income is a good place to start. This can include money that you put into a retirement account such as a 401K or Roth or Traditional IRA. Don’t get in the habit of avoiding the savings cycle so you can put this 15 percent towards other expenses, such as entertainment.

Insurance

The final five percent of your budget should go towards insurance costs. This includes all types of insurance: home, life, car, health, disability, etc.

For most consumers, the above is the ideal budget breakdown. Can you make this budget work based on your income and expenses?

Do you have an overall idea of how much money you spend each month? If so, this is a good thing because it means you have a budget in place. But believe it or not, this is far from the end all. If you really want to understand what is going on with your money you need to take a look at the big picture. And in order to do this you need to build an annual budget. This may seem like overkill, but the nice thing about an annual budget is that it gives you an overview of the entire year as opposed to one small piece of the puzzle.

You may be thinking: why do I need an annual budget? Simply put, you want to know how much something costs per year rather than just per month. When you look at your budget from an annual point of view you will see just how much you are spending. There is a good chance that this will open your eyes to some things you don’t like, as well as some you are proud of.

Take for instance your car payment. Many people shop for a car based on the monthly payment. And as you know this is the number you will use when calculating your monthly budget. You may look at a $700/month car payment and never think twice. After all, you have the money for this, right? But when you take a look at this within your annual budget you will see you are paying $8,400 per year for your car. Now what do you think about this purchase? By looking at the big picture you may think twice about where your money is going.

Most people never understand the importance of an annual budget until they finally decide to build one. It is at this point that they eventually see how much money they are spending, and what needs to be changed sooner rather than later.

It is important to get a complete view of your finances, and the best way you can do this is to build an annual budget.

Just because the economy is bad does not mean you should never leave home. In fact, now may be the best time to travel if you know how to budget your expenses and save money along the way.

The following tips are perfect for traveling on a budget:

1. Take a trip with another person or family so you can split the costs. Imagine how much cheaper gasoline would be if you were to car pool with a friend or family member. The same holds true for other expenses including car rental (if you need one), lodging, etc. By splitting costs you are effectively halving the amount of money you would have spent.

2. Use the internet to find and compare the best travel deals. Sites such as Kayak.com allow you to find cheap flights, cars, vacation packages, lodging, and much more. With the ability to compare prices there is no reason why you won’t be able to save money.

3. Avoid eating out. Instead, bring along as many meals and treats as possible. This may very well be the best way to save money when traveling. Believe it or not, a family of four would spend an average of $100/day eating out; and this is a conservative estimate.

4. Opt for free or cheap entertainment. For instance, instead of spending a lot of money on a guided bus tour you could simply walk around the area and learn on your own. In many cases it is more fun to explore an area without a “so called professional.” Ask locals for ideas on what to see, and grab a map from your hotel or a convenient store.

5. Take cash instead of relying on credit cards. This may not sound like the best idea, but if you want to save money it is a tip you don’t want to pass by. When you rely on cash you can only spend what you have. For example, you may want to take $1,000 in cash for a seven day trip. This means you will be able to comfortably spend $143/day. And remember, you don’t have to spend your allotment every day. Helpful hint: Be sure to take at least one credit card with you in case of an emergency.

If you are a budget-minded traveler you will appreciate these five money saving tips.

A budget isn’t a budget unless you include a detailed, accurate list of your income and expenses. Any error in these two categories could lead to your entire budget being out of whack. Is that something you are willing to risk?

Income

There are three possible income sources to include in your budget. 1. Your income. 2. Your spouse’s income. 3. Secondary income generated by you or your spouse. You may only have one of these items to worry about, but others have two or three. Of course, the more income you have coming in the better your budget is going to look.

When you include your budget be sure to use net income figures. If you use your gross income you are going to be including income that is “unusable.” This will lead to an unbalanced budget, and in turn many other issues.

Expenses

Break your expenses down into two categories: fixed and variable. Many people think that this is overkill, but it is one of the most important moves you will make. Fixed expenses are those that stay relatively the same each month. This includes your car payment, rent or mortgage, and utility bills. Variable expenses, on the other hand, are those that are never the same. They include gifts, entertainment costs, and gasoline among others.

It is easy to budget for fixed expenses because they stay pretty much the same. But when it comes to variable expenses your situation can become a bit more complicated. The best thing you can do is take an average of your past three months and then use this number when formulating your budget. Take for instance your gasoline expense. Month one: $150. Month two: $115. Month three: $125. If you average these three numbers you come up with a cost of $130. This may not be exact, but it is the number you should use on your budget. Remember, you can adjust any estimates as needed.

If you include accurate income and expense details you will find it easier to manage and follow your budget.

Many people throw around the word “budget” with reckless abandon. They see this as a simple word and a simple part of life. But of course, this is not always the case. There are a lot of details that go into a budget. When setting up your budget you need to know what to include, what to leave out, and what to pay the most attention to.

Here are three basics that need to be included in every budget:

1. Income. This is the number one detail of a budget, and you need to make sure it is 100 percent accurate. Every decision you make will be based off of this number. Remember to include any and all income from both you and your spouse.

2. Expenses. Budgeting would be simple with no expense column, but this is not realistic no matter how good you are with your money. When devising your budget, more particularly your expenses, be sure to have a list of those that are fixed and variable. With two categories it is easier to more accurately predict your regular monthly expenses.

3. Savings. Many people don’t think about saving money when planning a budget. Instead, they focus solely on income and expenses and then go from there. The difference between what you earn and what you spend can be saved. For example, if your income is $5k and your expenses are $4k you have an extra thousand dollars each month. This can be used in many ways, including savings.

One last point: be sure to keep your budget either on paper or through a computer program. Believe it or not, many people say they don’t need to write out their budget. Instead, “it is in their mind.” It is better to have your budget in front of you than to try and remember your income, expenses, savings, etc.

All in all, these basics show you what goes into a budget as well how this will help you to get started.

Creating a budget is an important step to take if you are interested in financial success. Not only will this keep your finances in order right now, but the proper budget will go a long way in securing your future as well. Before you sit down to plan and create your budget you must first collect all the necessary information.

Here are five basic steps to follow if you are in the process of creating a budget:

1. Bring together and organize all of your financial statements. This includes everything from pay stubs to bills to bank statements. Anything that is important to your finances should be included.

2. Accurately record your income. You can do this easily enough by reviewing the pay stubs that you collected in step one. Remember to record all income including that of your primary job, as well as any secondary money you bring in on a regular basis. Also, if you are budgeting with your spouse include his or her income as well.

3. Accurately record your monthly expenses. There are two categories that you will deal with during this step: fixed and variable. Fixed expenses are those that stay pretty much the same month in and month out. This can include your car payment, student loan, some utility bills, mortgage or rent, etc. Variable expenses are those that change monthly and include entertainment, gas, groceries, and gifts among others. When creating a budget it is important to make a reasonable estimate of your variable expenses based on past months.

4. Add up your income and expenses. As a rule of thumb your income should always exceed your expenses. If you are backwards, and your expenses are more than your income, your budget is not going to work. At this point you need to recalculate your information, and quite possibly make changes. The difference between your income and expenses can be put towards basic savings, retirement accounts, etc.

5. Make adjustments through monthly reviews. As you know your budget is not going to stay the same for the rest of your life. You may begin to earn more money, or you may add some new expenses to your budget. There is nothing wrong with making adjustments as long as they are accurate and fit your plan.

These five steps are the basics to creating a budget. If you accurately complete each step the end result will be a budget that suits your financial wants and needs.

In a study at Harvard Business School in 1979, business students were asked, “How many of you have set clear, written goals for your future and made plans to accomplish them?” As it turned out: 13 percent had goals but hadn’t put them in writing, 3 percent had specific goals and had put them in writing, 84 percent had no goals at all.

Ten years later, the study was revisited to see how each student was performing in the business world.

• The 13 percent who had made goals were earning about double, on average, of what the 84 percent who had made no goals were earning.
• The 3 percent who wrote their goals were earning ten times as much as the remaining 97 percent put together.

» Continue reading “Why You Need A Budget”

Many people run into financial problems like excessive debt because they haven’t made any concrete financial plans in their lives. Simply by setting a strong budget or using personal finance programs, people would be able to avoid financial blunders. Setting a budget is about putting all of your financial information down on a computer screen or a piece of paper so that there’s no subjectivity to it.

By having the hard numbers in front of you, major financial blunders can be avoided through some objective, prudent moves. So what are three common financial blunders caused by FTB? Let’s examine.

» Continue reading “Three Mistakes Caused By Failure to Budget”