Good Morning Everyone. Today we are continuing on with another budget themed post.  Today we are discussing how to fit everything into our monthly budget.  Regardless of how much money we make we can always make room to fit all of our goals into our budget.

Some people don’t invest because they don’t know where to start.  Some people don’t save because they don’t think that they make enough money, and very often most people spend all of their monthly income.  It’s human nature; we can always find something to spend our money on. The key to sticking to our monthly budget is to spend what is left over only after we invest for the long term, save for the short term, and pay all of our monthly bills.

Saving and Spending with our Monthly Budget

As a general rule we should spend 70% of our salary and save 30% of our total net (after tax) monthly income.  I know some savvy savers who live on only 50% of their monthly income and they save one full pay check every month, however for many of us (especially if we are still in school) this is not possible.  Of course we want to have the least amount of expenses as possible each month, but we don’t want our lifestyle to suffer at the cost of trying to save money.

The key to smart budgeting is to make sure that when we spend money the cost is worth it.  If we overspend in one category of our budget then we have to save somewhere else.  It’s not important (and usually not efficient) to try and micro manage our monthly budget; we have to look at the big picture.  If we pay expensive monthly rent to live close to work or to live in a really nice neighbourhood for convenience then we may not need to have a car or to buy a monthly bus pass.

Our Budget Can Have Investing Too

The 30% of our net salary that should be saved can be divided between saving for the short term in case of an emergency, saving for our 5-10 year goals such as buying a home, as well as saving for retirement.  We should always be saving on a regular basis for the short, medium, and long term; however the percentages allocated to each time horizon depend on our personal goals as well as our age.

If we are very young we may not need to allocate a lot of money towards saving for our retirement, because over the long term even small amounts of savings can add up to large amounts of money over the long term.  We may want to focus on short term and medium term investing when we are younger because we probably have many other personal goals to achieve before retirement.

As we grow older and we start achieving our short term and medium term goals we can start to allocate more of our monthly savings towards retirement because for many of us retirement is our ultimate long term financial goal.

Photo by Borman

Good Morning Green Panda Friends and Happy First Monday of February.  It’s past the first of the month and that means that rent is due, and so are all of our regular monthly bills.  Today we are discussing why it’s important to pay our bills on time and how we can budget our income to make sure that we don’t miss any of our payments.

It’s important to pay our bills on time because our hydro, cable, and electricity bills are a form of credit.  If we miss a payment it can definitely affect our credit score in a negative way.  This past week I had a client come and see me who was retired and living on a fixed income.  He needed help with his budget because he doesn’t have enough income to cover all of his monthly expenses.

When I asked where his money was going each month he said that it was being spent on utilities and maintenance fees to keep his home in the suburbs up and running each month.  I don’t understand why one person who lives alone needs a big house with a pool and a double garage.  Extra space just means extra expenses for heating, cleaning, and up keep.  When I asked him if he wanted to sell his house and downgrade to a more affordable home he said no, he was very happy and did not want to move.

Keeping his home was putting him in debt, and borrowing to make ends meet is never a smart financial strategy.  If we can’t even afford to pay our monthly bills we are never going to be able to afford to pay our monthly bills and repay a loan at the same time. Budgeting is about making sure that we always have more income coming in than we have going out to pay our monthly bills and expenses.

3 Helpful Tips to Make Sure Your Bills Are Paid On Time

1. Make Payments Every 14 days. It is a lot easier to divide our bills into two smaller amounts than it is to make one large payment each month.  It is a lot easier for record keeping purposes to set up automatic payments each month and have our bills directly debited from our bank accounts. However it may not be what is best for our budget.  If we don’t have the money in our bank account to pay the monthly bill in full then our payment will be returned due to non sufficient funds (NSF) and that is very harmful to our credit score.

2. Check The Total Amount Due. Before we make any monthly bill payments we should always double check our last statement.  Even if we miss our payment by $0.03 our bill company will mark our payment as being late; and this will show as a missed payment on our credit bureau.

3. If We Can’t Afford It Then Make Cuts.  If we can’t afford our bills every month there are only two ways that we can fix this problem….earn more income each month or make cuts to our monthly expenses.

Photo by Camera Eye

I wanted to kick it old school today and write about a topic that I used to cover when I first became a personal finance blogger in 2008. I wanted to look at the biggest ways that we waste money in our 20s. I want you guys to save more money and keep more money in your pockets. I don’t want you to have nothing to show for your hard work in your 20s.

What are some of the biggest wallet busters in your 20s?

Buying a car before you can afford it.

A new car is an absolute killer in your 20s. We all want a sexy car that impresses our peers. We don’t care about getting from point A to point B. We want to get to every point in style. Is it worth it? I don’t think so. Do you realize how expensive owning a car is? Between insurance, gas, maintenance, and everything else, a car can end up costing you a fortune. Are you ready to spend all of that money on transportation alone?

On the flip side, you can buy an average car or take the bus. Obviously taking the bus is an extreme option and would only work in some areas. Either way, you can keep so much more of your cash in your wallet by watching what you drive.

Financing all of your education with student loans.

There’s no shame in using student loans to cover your education. Most students will likely use loans to pay for their education. That’s totally normal. The problem lies in ONLY relying on loans to pay for college. That’s a big problem. This is an issue because we assume that we’re going to be making the big bucks as soon as we finish with college. This isn’t always the case. Most college grads will struggle to even get a job, let alone make big money, and then deal with paying off student debt.

By the time you start making money in your 20s you’re not going to want to deal with paying off all of those loans. Imagine half of your pay check going towards your loans. Imagine not being able to enjoy the money that you work so hard for.

This is the reality of financing all of your education with student loans. You don’t have to rely on loans. You can work in college, apply for free money, and even delay college to save some money.

Risky investments.

Most young people starting venturing into risky investments before they even exactly how the stock market works. While I do support taking risks and chances in your 20s, it doesn’t make sense to take uneducated risks. Imagine losing your savings to some big gamble. Is it worth the risk?

At the end of the day these are three of the biggest ways that we waste money in our 20s. I wanted to focus on three so that you go after the big wins instead of focusing on small expenses.

“You don’t want to take initiative or responsibility, so you check your incoming mail, your Twitter stream, and your blog comments. Surely, there’s something to play off of, something to get angry about, some meeting to go to. I know someone who goes to forty conferences a year and never seems to actually produce anything.” — Seth Godin

Far too many of us spend our 20s wasting precious. Money comes and goes. Time goes and never comes back. Once you lose time, you’re never going to get it back. That time is simply gone forever. You can make your money back. You can never get your time back.

I’m not here to be all negative. I wanted to write a piece for those of you that want to make the most out of your 20s. This is for everyone that wants to see some serious results before they hit the age of 30.

What can you do to avoid wasting time in your 20s?

Get your work done first.

It’s far too easy to put your work off until later. It doesn’t matter what you want to work on. You need to start your work first. The more you put your work off or starting a new business, the less likely you are to do anything. It’s easy to talk the walk. Do you actually walk the walk?

My recommendation is simple: start your day off by doing the most important thing first. Then you can watch UFC fights on YouTube for the rest of the evening.

Plan lazy time.

There’s nothing wrong with lazy time. I actually encourage that you have lazy time. I’m lazy pretty often to be honest. I sleep in. I watch WWE and UFC for hours. I slack off often. The trick to slacking off is that you plan for it (planning slacking, what if you’re too lazy?).

The reason that I love to plan lazy time is that I won’t feel bad about it. We usually feel bad about eating junk food or slacking off because we never planned for it and we feel guilty. I hate guilt. There’s no time to feel guilty. This is why I plan my lazy time. I slack off like a champ. Then I get back to work.

Think of the bigger picture.

What’s your bigger goal? Do you have a bigger picture? I find that when I worry about some minor detail or some random crap, the reason is that I’m missing out on the big picture. For me, I see myself working in this field and helping young people for many years to come. That’s my bigger picture. Sure, many issues will arise over the years. Money will be tight at times. Relationships will bring you down. Many bad things will happen. What’s important is that you keep your eye on the prize.

Ignore the distractions.

There are far too many distractions around us these days. You go on Facebook to respond to a message and next you know, two hours have passed by. Getting distracted and wasted time is easier than ever before (ask anyone with an iPhone). If you manage to at least ignore the distractions half of the time, you’ll be ahead of the game. Go ahead and close this window. Ditch ALL distractions if you have to.

At the end of the day, we all are bound to waste some time in our 20s. There’s no need to waste all of our time. Why not make use of our valuable time? I don’t want you to look back at these years to regret. I want you to smile!

What’s the best way to master a new skill after college?

Find something you’ve been dying to learn.

What skill do you want to pickup? Do you want to learn a new sport? Do you want to pickup a new talent? Perhaps you’ll finally learn who to dance? The first step here is to figure out what you want to learn. Nobody read this is without a skill in mind. We all want to learn something new. Not all of us want to admit it. All of us do have something that we want to finally learn moving forward.

What are a few tips to help you decide what skill to learn?

• Think of what’s always on your mind.
• Think of what you do on Saturday mornings.
• Consider what you’re already decent at.
• Look at what you’re jealous of your friends for doing.

Figure out how you’ll learn.

There are many ways to learn a new skill. It will usually depend on how quickly you want to learn, how much money you have, and what resources you have at your disposal. Let’s break all three down.

When you want to learn quickly. If you’re in a hurry you’re going to have to spend some cash. The good news is that you can spend money on personalized coaching, consulting, and supplements. If you’re willing to spend the money you can learn from the best.

When you have no money. You need to find free options, try to trade skills with someone else, or find a part-time job to help support your new skill.

When you have plenty of resources. The beauty about the Internet is that YouTube is the only resource that you really need. You can learn how to dance, cut hair, play a sport, or anything else that your heart desires on the net. I’m personally learning how to dance salsa with online videos. My new barber (my 15 year old brother) learned how to cut hair by watching instructional videos online. You have no excuses.

Keep on practising.

It’s all about daily practise. We often overestimate what we can do in a day and underestimate what can be done over a few days. You have all of this new found time at your disposal. You can do something productive with it or you can let it go to waste. You need to fill your days up with something more than just sleep or watching reruns of Saved By The Bell.

That’s how you can pick up a new skill from start to finish after school. What are you waiting for?

A recap of the best options for life after collge:

1. Kill your debt.
2. Create something.
3. Start your own business.
4. Learn a new language.
5. Master a skill.
6. Do nothing.
7. Work abroad.

Those are 7 amazing options to consider when you’re done with your studies. We’re going to randomly dissect each idea per post.