Financial Goals

Apache is functioning normally

Now might be a good time to buy.

That’s the takeaway from a recent Morningstar analysis, which reported in on a seeming contradiction in stock prices. The market as a whole, Morningstar writes, is expensive. But those prices are a bargain compared to what the underlying companies generally should cost.

At threshold level, stock prices have gone way, way up over the last several years. As Morningstar writes, its U.S. Market Index is up about 8.6% in 2023 alone and 16.2% over the recent low last October. That’s despite 2022’s inflation, which has largely but not yet completely abated, and ongoing concerns of a potential recession in late 2023.

“We still think the U.S. equity market looks expensive and has been getting more expensive since the start of the year,” wrote Morningstar while quoting Jim Masturzo, chief investment officer of multi-asset strategies at Research Affiliates. “The market is holding up well given the macroeconomic environment.”

So where can investors find the best bargains?

For hands-on help strategizing your investments, consider matching for free with a vetted financial advisor. 

For the Best Bargains, Look to Value Stocks

Look at the S&P 500, and you’ll also see lofty share prices. From an October 2022 low around 3,500, the S&P 500 is now back to hovering near 4,200 points. Even if you disregard the March, 2020 low as an aberration, this is a huge gain from the S&P 500’s pre-Covid value of around 3,300 points.

So the stock market is doing well, with high prices that are going steadily up. Much of that, writes Morningstar, is down to technology stocks that have posted huge gains in recent months and years. These are “the big technology stocks that dominate the weightings in broad market indexes, such as Apple (AAPL) — up 35% in 2023 — and Alphabet (GOOGL) — is up 39% so far this year. That, say some strategists, has left large growth stocks particularly expensive.”

Expensive is one word for it. At time of writing Apple traded for $177 and Alphabet for $123. Stocks like Tesla (TSLA) and Meta (META) traded for $197 and $263 per share, respectively. Although, to be fair, none of these compare with the likes of Chipotle Mexican Grill (CMG), which has a current share price of $2,064.

Yet despite these high prices, Morningstar feels that now is still a good time to buy. “[B]y Morningstar’s fair value estimate measures, stocks are actually undervalued by more than 9%, with value stocks looking particularly cheap,” Morning star writes. “That market discount, however, has been narrowing significantly since the October low.”

The key to this analysis is that term “value stocks.” Morningstar sees a market rich in value stocks.

Stocks are considered value stocks when they have a low share price compared with the underlying value of the company. For example, if you poured over the books of a company and decided that it was fairly worth about $20 per share, but it is currently trading for $15 per share, you would consider it a value stock.

Value stocks are generally considered a good buy for long term investors. Historically the market has been good at correcting a company’s share price to its fundamental value, a process known as “market efficiency.” Investors who buy a stock trading below the company’s fair valuation can generally expect that share price to rise over time to the level of its fundamental value. (some economists have criticized the market efficiency theory in the era of soaring tech sector valuations.)

The tricky part is figuring out that company’s underlying value.

How to Analyze a Company’s Underlying Value in Search of Bargain Stocks

Investors use a number of different metrics to decide what a company should trade for, including indicators like volatility (lower volatility tends to mean stronger value), dividends (higher dividends show stronger cash flow) and peer/competitor share price (higher priced competitors suggest a valuable industry). However the most common indicator that investors reach for is a company’s Price-to-Earnings Ratio, or P/E ratio.

A P/E ratio measures a company’s share price against its total earnings per share. For example, say that a company trades for $40 per share. It has released 1 million shares of stock total and it had $20 million in total earnings last year, giving it earnings of $20 per share. The company’s P/E ratio would be 2 ($40/$20).

The price to earnings ratio shows how much value you get for every dollar invested in a given stock. In our case above, for example, you pay $2 in share price for every $1 of company earnings. Or, to put it another way, every $2 that you invest in the company buys you $1 of value.

In general, across the market, 16 is considered an average price-to-earnings ratio. This means that with an average investment you pay $16 for every $1 of underlying earnings. Companies with low P/E ratio, whether compared with peer industries or the market at large, are generally considered value stocks. It’s likely that other investors will bid the price of this asset up because it offers better value than comparable investments.

All of which brings us back to Morningstar’s analysis.

As we noted above, Morningstar sees a market rich in value stocks. This is due to several different factors, including both standard P/E ratios and an adjusted form of this analysis known as the Cyclically Adjusted P/E, or “CAPE,” ratio. A CAPE analysis uses a company’s inflation-adjusted earnings over the past 10 years, rather than the firm’s most recent earnings report, in order to try and eliminated short-term anomalies in the business cycle. With both a standard P/E and a CAPE analysis, Morningstar writes, “fair value suggests stocks are undervalued.”

“Up 8.6% this year to date, the Morningstar U.S. Market Index sports a price/earnings multiple of 19.8 times based on trailing 12-month earnings,” Morningstar writes. “That compares with a P/E of 24.2 times at its peak in late 2021 and 17 times at the low in mid-October 2022… [And] value stocks are cheap relative to growth stocks [with] the materials sector trading at a P/E of 15 compared with an average closer to 18. Energy stocks are trading at a P/E of 7 compared with an average of 16.”

This is even true outside of the United States, where emerging markets are trading at a P/E ratio of 13.5.

Now, it’s important to understand that investors still do need to look for value. The large cap stocks out there, especially in technology, are expensive. “They are very high historically and relative to interest rates, liquidity, and inflation,” Morningstar’s analysis notes. What this means, in a nutshell, is that technology stocks have quite possibly met or exceeded their fundamental value. These companies have commanded a lot of growth, which means there’s not much of a gap left between their share price and their value.

The high-priced stocks that are demanding hundreds of dollars per share may grab headlines, but they aren’t necessarily driving the market’s value. Instead, look for the stocks with strong business fundamentals and a low P/E ratio.

Because despite the strong market, they’re out there, and now might be a great time to buy them.

The Bottom Line

A recent Morningstar analysis suggests that now might be a great time to buy into the market. Even though prices are high, they’re often low relative to the underlying value of companies at large, making this a strong moment for would-be investors.

Fundamentals Investing Tips

  • A P/E ratio is part of what’s known as “fundamental analysis.” This means that you look at the underlying company’s strengths and weaknesses to look for good investment opportunities. It’s an essential part of any long-term investor’s toolkit. 
  • You know what else is an essential part of your toolkit? Good advice. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Photo credit: ©iStock/Blue Planet Studio, ©iStock/Galeanu Mihai

Eric Reed
Eric Reed is a freelance journalist who specializes in economics, policy and global issues, with substantial coverage of finance and personal finance. He has contributed to outlets including The Street, CNBC, Glassdoor and Consumer Reports. Eric’s work focuses on the human impact of abstract issues, emphasizing analytical journalism that helps readers more fully understand their world and their money. He has reported from more than a dozen countries, with datelines that include Sao Paolo, Brazil; Phnom Penh, Cambodia; and Athens, Greece. A former attorney, before becoming a journalist Eric worked in securities litigation and white collar criminal defense with a pro bono specialty in human trafficking issues. He graduated from the University of Michigan Law School and can be found any given Saturday in the fall cheering on his Wolverines.

Source: smartasset.com

Apache is functioning normally

Each payday you have great intentions.  You swear that this is the month where you aren’t going to spend too much money. You are going to watch every penny and keep your spending under control.  Before you know it, you can’t even afford to buy groceries.   Is there an answer to your problem?  Yes.  STOP SPENDING MONEY.

Overspending is a problem which affects many people.   Whether you are rich or struggle to make ends meet, you too might find that you spend too much.  Some reasons are financial, and others are emotional.

The first way you can get spending under control is to take a look as to why you are spending too much. That is the first step.  No one can answer this question but you.

After years of helping thousands of readers (just like you), I’ve compiled a list of the top 12 reasons that people overspend.  You might find yourself in one, two or even more!

HOW DO YOU KNOW IF YOU ARE OVERSPENDING?

YOU’VE MAXED OUT YOUR CREDIT CARDS

When there is no room to charge anything on your cards, you might have a problem.  In most cases, maxed credit cards signals you are living beyond your means.  If you have to continue to charge because you don’t have money, then you are spending too much.

YOU CAN’T FIND A HOME FOR YOUR LATEST PURCHASE

Your temptation might be electronics or handbags. No matter what you love to buy, you might notice you are running out of room to store things.  When the stuff takes over your home and is causing clutter, it is time to take a long hard look at how you spend money.

YOUR BUDGET NEVER WORKS

There may be months when you don’t have enough money in your budget to cover your mortgage or food.  When you continually spend money on the wrong things, your budget will not work.

That means if you have just $50 for entertainment, do not spend $75.  That other $25 has to come from another budget line.

YOU SPEND MORE THAN YOU EARN

Take a look at your credit card balances. You might be paying only the minimum balance because you can’t pay it in full. When you spend more than you make and continue to add more debt, take a look at what you are buying.  It might be time to pull back and stay out of the stores.

HOW TO STOP SPENDING SO MUCH MONEY

Now that you can see how you spend your money, the next step is to make a change.  You have to stop throwing it away.  Right now.  Here are the steps to take to control and stop spending money.

1. MAKE A BUDGET

I know, I know.  I probably sound like a broken record as I keep bringing up this budget thing.  However, it’s true. If you do not have a budget, you have no idea where you are spending your money.

A budget is needed so that you can direct your money where to go each time you get paid.  It also helps you know how much you have to available to spend on groceries, clothing, dining out and even entertainment.  When you know you have a limited amount to spend on specific categories, you are instantly in control of our spending.

Read more:  How to Create a Budget (even if you suck at budgeting)

2. PLAN AHEAD

Meal planning is one thing many people don’t think about when it comes to overspending.  If you don’t plan your meals (and stock your fridge and pantry accordingly), you are more likely to run out to eat for dinner. Doing this at $25 a pop 2 or 3 times a week takes its toll on your budget.

Creating a meal plan will not only help you control your spending, but you might also find that you eat (and feel) much better too.

3. USE A SHOPPING LIST

Before you go to the store, it is essential you make a list.  Check your fridge, freezer, and pantry so that you are not purchasing items you do not need – especially produce.

There is so much waste of food that expires before you can consume it.  That results in you buying items so that they can end up right in the trash can.  Make sure you plan your shopping trip and then purchase just what you need, as well as what you can eat before you hit the store the following week.

4. STOP PAYING FOR CONVENIENCE

There is a quick fix for nearly everything.  You can find dinners in boxes, small pre-packaged snacks, etc.  Rather than purchase convenience items, buy the larger size snacks and then re-package yourself into smaller baggies.  You will not only get more out of a box, but you can even control how much you put into each baggie.

There are other ways we pay for convenience.  We pay for someone to iron our shirts, wash our cars and even mow our lawns.  By doing these things ourselves, we can keep much more money and easily stop overspending.

Read more:  How You are Killing Your Grocery Budget

5. STOP USING CREDIT CARDS

We live in an age where our money is all digitally tracked, be it on credit or debit cards.  Yes, they are more convenient, but they make it easy to overspend.  When you use cash, it is impossible to overspend.  You honestly can. Not. Do. It.

I hear all the time that people pay off cards at the end of the month and that they don’t overspend, but that is not the truth for most people.  You might think that it is just $10 a week.  However, that $10 a week is a hit of $520 over the course of a year.  What could you do with an additional $500 in your pocket?

Read more:  How to Create a Workable Cash Budget System

6. PAY YOUR BILLS ON TIME

We all have bills.  We know when they are due.  When you miss the payment due date, you get assessed a late charge.   Pay them on time, so you don’t pay more than you need to.

In addition to late fees, not paying your bills on time can have an adverse effect on your credit score.

Learn how to organize your bills, so you never pay them late again.

7. DO NOT LIVE ABOVE YOUR MEANS

Few of us would not love new clothes or a new car. We all would like to make more money or get the hottest new device.  The thing is, can you afford it?  Is it a want or is it a need?

If you are using credit or loans to get items that you can not afford, then you are living beyond your means and spending money you don’t have.  Scale back and make sure that you can honestly afford the house or the car and that it doesn’t ruin your budget and cost you too much.

Read more: Defining Your Wants vs. Your Needs

8. DON’T FALL FOR IMPULSE BUYS

Stores are sneaky about making us spend money.  They use signs, layout, and even scents to lure you into wanting to buy more.  The thing is, if you purchase something you did not intend to, then you are already blowing your budget and probably overspending.

Another way that you are spending too much is when you plan dinner but then decide at the last minute to go out to dinner instead.  Why do that when you have food waiting for you at home (which you’ve already paid for)?

The final reason you may impulse buy is that of emotion.  If you feel a rush because of that new item, you may purchase out of impulse and emotion instead of need.

Read more:  Stopping Impulse Shopping

9. FIND ANOTHER BOREDOM FILLER

I remember being in an online forum when my kids were little, and we talked about our day.  Many of the mothers went to the store every. Single. Day.  They said they could not handle being in the house and just had to go somewhere.  That resulted in them buying things they did not need.

If you are bored, find a new hobby.  If you just need to get out of the house, why not go for a walk or play a game with the kids?  Find a way to redirect your boredom so you stay out of the store and stop overspending.

10. USE FINANCIAL GOALS

When you do not have financial goals, you have nothing to work towards. You might want to get out of debt, or you may want that newer vehicle.

Take a look at what you are spending each week on non-essential items.  What would happen if you would put that money into savings or paid off your debt instead?  How much closer would you be towards getting that new car or being debt free?

Find a goal you want to achieve.  Talk to your family and see if you have something you can work towards together.  By setting a goal that everyone wants, you will all be more aware of your spending and will contribute towards reaching it more quickly.

11. STOP SPENDING MONEY WHEN YOU TRACK YOUR SHOPPING

I know many people who have tried to use cash, and they say it does not work because they spend it too quickly.  There are others I know who spend too much on plastic each month.  The reason is that they are not tracking what they spend, which is a reason why they overspend.

If you use cash, this is where the envelope system is most helpful.  You will track your spending out of each one so you can see where your money is going.  As the envelope amount gets smaller and smaller, you think twice before you pick up that item — because you may not be able to afford it.

You can do this same thing if you use plastic.  There are all sorts of tracking apps to help you monitor what you are spending on all of your various categories.

No matter how you pay for items, make sure you are always tracking what you spend – you might be shocked to learn where your money goes.

Read more:  Creating and Understanding a Spending Plan

12. DON’T FALL FOR THE SALES

When you walk into the store, pay no mind to the sales.  Use your list and stick to it.  Don’t fall for the fancy sales signs, smells, and flashing lights to lure you into buying something you don’t need.

Read more:  Understanding the Tricks Stores Use to Get You to Spend Money

Before you can gain control of your finances, you need to figure out why you are spending more than you should.  Simple changes to the way you view money can make all the difference.

Source: pennypinchinmom.com

Apache is functioning normally

Some people buy things because they think it will make them happier. They may buy a new pair of shoes to feel better about themselves or a new car to impress someone.

Well, I want to tell you something: Buying things won’t make you a happier person. Instead, you should focus on what makes YOU happy.

However, that doesn’t stop some people from spending much more than they have, especially because it’s easy to think that buying things will make them a happier person.

Considering that 68% of people live paycheck to paycheck, 26% have no savings whatsoever, the median amount saved for retirement is less than $60,000, and the average household has $7,283 in credit card debt- I’m going to assume that the average person is feeling more stress than happiness due to the things that they buy.

Sure, you may get a little bit of excitement as you purchase that new pair of shoes or new car (occasionally), but for the most part, you won’t still have that same feeling years later.

You probably won’t even be happy with that purchase just a month later!

Usually, you’ll regret it or feel some other negative feeling, and in today’s post we’ll talk about why that spending won’t make you happy.

Now, I’m not saying that all spending is bad. Spending is fine, as long as it’s budgeted for, you can afford it, and it actually makes you happy! In this blog post, I’m referring to the opposite type of spending- the type where you’re trying to impress someone, emotional spending, and so on.

Related:

Buying things won’t make you happy for many reasons. Continue reading below to learn more.

Your stuff doesn’t define who you are.

Having more stuff doesn’t make you happier and your stuff doesn’t define who you are.

You’re not that pair of pants…

You’re not your car…

You should only purchase things that you want and/or need, and not if you are trying to pretend to be someone else. You should only own something if you truly want it. Who cares about what everyone else has!

Your emotions can lead to spending disasters.

Some people spend money and buy things because they believe that it will make them happy. This is known as emotional spending.

According to NerdWallet, the average U.S. household (who has debt) has an average credit card debt of $15,611, and I’m sure some of that is due to emotional spending.

Emotional spending occurs for many different reasons. You may have had a bad day at work, a fight with your loved one, and so on. You might even be spending because you are stressed out about the amount of spending you have done.

However, emotional spending usually just leads to more problems and most often, never cures anything.

To end your emotional spending habit, I recommend:

  • Figuring out how much debt you have. You’ll most likely be shocked, and hopefully this will persuade you to change your spending habits and the way you deal with stress.
  • Understanding why you spend when you’re stressed. In order to stop stress spending, you need to really think about why you have this problem. Without understanding your problem, you may continue to fall into the same cycle over and over again.
  • Thinking about your financial goals, so that you can stay motivated.
  • Finding different ways to deal with stress.
  • Sticking to a budget.

Buying things can prevent you from reaching your goal.

You may be preventing yourself from reaching a financial goal by purchasing more and more. This can lead to additional stress, sadness, a feeling of defeat, and more.

The next time you are going to purchase something that is just a “want,” you may want to think about whether or not it will hold you back from your goal.

More stuff means more to maintain.

With every item you add to your life, there will be more and more that you’ll have to spend extra time and money to maintain. Things may get broken, lost, stolen, dirty, etc. They may need to be repaired or even replaced.

Who wants all of that stress?

That purchase may cost you more in the long run.

To build on the previous point, the initial cost of purchasing an item may not be the only cost. You may also need to pay to store the item, organize it, interest charges, and so on.

This can lead to more stress, more time spent on the item, and so on.

There’s always something else to buy.

I know people who are always buying the latest and greatest items. Every year they will buy the newest iPhone, they’ll upgrade their laptop, and more. Most of these people are in debt and live a paycheck to paycheck lifestyle.

Are these people happy?

I don’t know, but I don’t see how upgrading every single year could make you a happier person if you can’t afford it.

The thing is, there will always be something newer to buy. If you want the latest and greatest thing, you may be disappointed because there will always be something else.

What makes one person happy won’t necessarily be the same for you.

I’m sure almost everyone, at one point in their life, has felt the need to keep up with someone else.

You may want the same car, the same house, the same designer clothing, and so on.

The problem with this is that it can make you broke.

When trying to keep up with someone else, you might spend money you do not have. You might put expenses on credit cards to (in a pretend world) “afford” things. You might buy things that you do not care about. The problems can go on and on.

This can lead to a significant amount of debt.

Trying to the same things as someone else is not worth it because:

  • You will never be happy, no matter how much money you spend.
  • You will constantly compare yourself to everyone.
  • You will go into debt because that’s the only way you feel like you can keep up.
  • You will have a loan payment for everything because that’s the only way you can “afford” things.
  • You won’t have any money leftover for retirement, an emergency fund, etc. because you’re spending it all on things you do not need.

Instead, you should figure out why you want to keep up with someone else, think about your own life and your own goals, realize that jealousy won’t get you anywhere, and try your best to live within your means.

You’re not impressing anyone.

If you’re purchasing things just to impress others, well- you will be disappointed. For the most part, no one cares or will even know that you bought something new.

You should do what makes you happy and only buy things for yourself- not to impress anyone else.

Money problems may lead to stress and other problems.

If you buy things that you cannot afford, this can lead to significant amounts of stress and other financial problems.

You may find yourself with more credit card debt than you can handle, personal loans, high interest charges, stuck in a paycheck to paycheck lifestyle, and more.

Who wants all of that?

Do you think that buying things makes you happy? Why or why not?

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Source: makingsenseofcents.com

Apache is functioning normally

There has probably been at least one point in everyone’s life when they have engaged in a bad money habit. However, it’s best to realize your bad money habit now rather than later!

I believe it’s much better to realize your problem as soon as you can so that you can take action towards changing for the better. Doing so can help you improve your financial situation for years to come.

Understanding your bad money habits and making a change can help you stop living paycheck to paycheck, eliminate debt, pursue your passion, save for your goals, reach retirement, and more.

Here are several bad money habits that may be making you broke.

Keeping up with the Joneses – what a bad money habit!

I’m sure almost everyone, at one point in their life, has felt the need to keep up with the Joneses.

Whether you are five years old and want that new toy everyone is playing with, or if you are 40 years old and are feeling the need to upgrade your house, car, etc., everyone has experienced it.

The problem with this is that keeping up with the Joneses can make you broke.

VERY broke.

When trying to keep up with the Joneses, you might spend money you do not have. You might put expenses on credit cards to (in a pretend world) “afford” things. You might buy things that you do not care about. The problems can go on and on.

This can lead to a significant amount of debt.

Keeping up with the Joneses is not worth it because:

  • You will never be happy, no matter how much money you spend.
  • You will constantly compare yourself to EVERYONE.
  • You will go into debt because that’s the only way you feel like you can keep up.
  • You will have a loan payment for everything because that’s the only way you can “afford” everything.
  • You won’t have any money leftover for retirement, an emergency fund, etc. because you’re spending it all on things you do not need.

Instead, you should figure out why you want to keep up with the Joneses, think about your own life and your own goals, realize that jealousy won’t get you anywhere, and try your best to live within your means.

Related:

Letting your emotions take control of your spending.

Emotional spending is a bad money habit that many people take part in. It’s one you should stop, because it doesn’t cure any problems.

According to NerdWallet, the average US household (who has debt) has an average credit card debt of $15,611, and I’m sure some of that is due to emotional spending.

Emotional spending occurs for many different reasons. You may have had a bad day at work, a fight with your loved one, and so on. You might even be spending because you are so stressed out about the amount of spending you have done.

To end your emotion spending habit, I recommend:

  • Figuring out the amount of debt you have. You’ll most likely be shocked, and hopefully this will persuade you to change your spending habits and the way you deal with stress.
  • Understanding why you spend when you’re stressed. In order to stop stress spending, you need to really think about why you have this problem. Without understanding your problem, you might just keep falling into the same cycle over and over again.
  • Thinking about your financial goals, so that you can stay motivated.
  • Finding different ways to deal with stress.
  • Sticking to a budget.

Not facing your debt.

Too many people never face their debt and don’t even know how much debt they have.

By not thinking about your total debt figure, it may seem less real and a way to run away from it. However, that will catch up to you in many ways, such as high interest charges, a bad credit score, numerous phone calls from debt collectors, possible paycheck garnishments, and more.

The first step to paying off your debt is to face it. You should add up your total debt, learn more about the debt you have, and create a plan to eliminate it.

Ignoring the importance of financial education.

Many people do not fully understand how credit cards work, how to improve their credit score, and more. However, if more people were educated on financial issues, this could lead to less debt, better managed budgets, and more.

I recommend diving into a good personal finance book, bookmarking your favorite financial blogs, staying up-to-date on the latest things going on in personal finance, and more.

Thinking you don’t need a budget.

Too many people go without a budget, because they believe they don’t need one. Sadly, many people believe that budgets are only for “poor” people, people who are horrible with money, and so on.

But, that just isn’t the case, at all. Nearly everyone needs some form of budget, even if that means just comparing your income and your expenses each month.

Budgets are great, because they keep you mindful of your income and expenses. With a budget, you will know exactly how much you can spend in a category each month, how much you have to work with, what spending areas need to be evaluated, among other things.

Budgets have helped people reach their goals, pay off debt, make more money, retire, and more.

Believing you’re invincible.

While I always try to stay positive and am a firm believer in the power of positive thinking, I do believe that everyone should have an emergency fund. However, many people have no emergency fund whatsoever, and this is a bad money habit.

There are many reasons to have an emergency fund:

  • An emergency fund can help you if you lose your job. No matter how stable you think your job is, there is always a chance that something could happen.
  • An emergency fund is wise if you do not have great health insurance or have a large annual deductible.
  • An emergency fund is a good idea if you have a car and need repairs.
  • An emergency fund is a need if you own a home. One of the lucky things that homeowners often get to deal with is an unexpected home repair. Having an emergency fund can help you if your basement floods, if a hole forms in your roof, and more.

Emergency funds are always good to have, because they give you peace of mind when something costly happens in your life. Instead of building onto your stress, you will know you can still afford to pay your bills and worry about more important things.

Being afraid of investing.

One of the biggest bad money habits is that far too many people are afraid of investing and never start.

Here are some reason to invest:

  • You can retire one day.
  • You never know what may happen in the future, so preparing now is important.
  • You can allow your money to grow over time.

I always say, the first thing you need to do if you want to start investing is to just jump in. You’ll never learn unless you make an attempt.

Read more at The 6 Steps To Take To Invest Your First Dollar – Yes, It’s Really This Easy!

If you are new to my blog, I am all about finding ways to make and save more money. Here are some of my favorite sites and products that may help you out:

  • Start a blog. Blogging is how I make a living and just a few years ago I never thought it would be possible. I earn over $70,000 a month online through my blog and you can read more about this in my monthly online income reports. You can create your own blog here with my easy-to-use tutorial. You can start your blog for as low as $3.49 per month plus you get a free domain if you sign-up through my tutorial.
  • Sign up for a website like Ebates where you can earn CASH BACK for just spending like how you normally would online. The service is free too! Plus, when you sign up through my link, you also receive a free $10 gift card bonus to Macys, Walmart, Target, or Kohls!
  • Answer surveys. Survey companies I recommend include Survey Junkie, Swagbucks, Pinecone Research, and Harris Poll Online. They’re free to join and free to use! You get paid to answer surveys and to test products. It’s best to sign up for as many as you can as that way you can receive the most surveys and make the most money.
  • Save money on food. I recently joined $5 Meal Plan in order to help me eat at home more and cut my food spending. It’s only $5 a month (the first two weeks are free too) and you get meal plans sent straight to you along with the exact shopping list you need in order to create the meals. Each meal costs around $2 per person or less. This allows you to save time because you won’t have to meal plan anymore, and it will save you money as well!
  • I highly recommend Credible for student loan refinancing. You can lower the interest rate on your student loans significantly by using Credible which may help you shave thousands off your student loan bill over time.
  • Cut your TV bill. Cut your cable, satellite, etc. Even go as far to go without Netflix or Hulu as well. Buy a digital antenna (this is the one we have) and enjoy free TV for life.
  • Try InboxDollars. InboxDollars is an online rewards website I recommend. You can earn cash by taking surveys, playing games, shopping online, searching the web, redeeming grocery coupons, and more. Also, by signing up through my link, you will receive $5.00 for free just for signing up!
  • Find a part-time job. There are many part-time jobs that you may be able to find. You can find a job on sites such as Snagajob, Craigslist (yes, I’ve found a legitimate job through there before), Monster, and so on.
  • Lower your cell phone bill. Instead of paying the $150 or more that you spend on your cell phone bill, there are companies out there like Republic Wireless that offer cell phone service starting at $10. YES, I SAID $10! If you use my Republic Wireless affiliate link, you can change your life and start saving thousands of dollars a year on your cell phone service. I created a full review on Republic Wireless as well if you are interested in hearing more. I’ve been using them for over a year and they are great.

What bad money habits are making you broke?

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Source: makingsenseofcents.com

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Saving money and controlling your spending can be hard. Really hard. I’ve been consciously managing my money and getting out of debt for a couple of years now, and I still struggle with it every day.

Some days I’m a recyclin’, reusin’, thrifty rock star. Other days I splurge on take-out just because I’m too frazzled to go to the grocery store. It’s a balancing act. I’m making forward progress on my debt and living within my means, but there are plenty of little slip ups along the way.

Real-life role models
I wrote recently about the importance of using clear financial goals to stay on track. Another powerful motivator for me is peer pressure. I tend to spend money like my friends do, so I try to seek out friends who spend (and save) money the way I want to.

We can’t all have a real millionaire next door like J.D. does. Most of us don’t have one person in our lives who is a single shining example of simple living. So I seek out a variety of frugal role models. No one person does everything exactly the way that’s best for me, but if I look around I can get frugal inspiration from many of my friends and family.

When I want to get new clothes, for example, I don’t go to the mall. I host a clothing swap or visit the Salvation Army with my friend Johanna, who is extremely savvy about thrift store shopping. I know if I go with her, I’ll spend $20 at most and walk out with a bag of clothes that will win me plenty of compliments when I wear them. I’ve learned to avoid shopping with friends who prefer to cruise through new clothing stores. In fact, most of my close friends are frugal converts who get their clothes second-hand like I do.

While Johanna is my go-to girl for clothes shopping, I can’t model my travel plans after hers. She can afford some pretty awesome travel, and that’s where she chooses to spend her money. I love to travel, too, but to do it at all I need to do it on the cheap. Since I’m usually traveling with my kids, my primary role model for thrifty travel is my mom.

She traveled a lot with me and my sister as children, and watching her do it taught me how to save money doing it myself. We pack our own food from home rather than buying overpriced junk at the airport, for example, because that’s how Mom did it. I’ve become an expert at scouring for deals on plane tickets. When we travel, we nearly always stay with family and friends rather than in hotels. We spend our time connecting with the loved ones we’re visiting, or taking advantage of the free sights and experiences a new city has to offer. We use libraries and discount passes to get access to all kinds of great stuff.

Perhaps the closest person in my life to the perfectly frugal, “millionaire next door” type is my friend Sarah. She’s far from a millionaire, but she’s a great role model. She’s been an inspiration to me since we were teenagers. She’s always lived on a low income, as a graduate student and then as an adjunct professor. She’s managed to stay almost entirely out of debt while living close to, or even below, the poverty line. She does it the old-fashioned way: by tracking her spending, staying connected to her goals and values, and spending less than she earns. She took on a little debt when she became a mom, and she’s diligently paying that off.

One of the best things about Sarah is that she’s not afraid to say, “I can’t afford that.” This is an invaluable trick for navigating social situations. It can be hard to pass up a dinner out or a concert when all your friends are going. Sometimes it seems rude to turn down an invitation to go out for cocktails. I’ve been known to overspend under social pressure. Sarah sticks to her budget, and will quite cheerfully say, “Sorry, I can’t afford to go out this week. Let’s have a picnic instead.” She’s always ready with suggestions for free or low-cost fun.

Online inspiration
Another great source for frugal inspiration is books and blogs like this one. In addition to the other great writers on GRS, I love reading:

These writers bring a personal perspective to their blog posts that makes me feel like I’m talking to a friend. A smart, frugal friend who cares deeply about conserving resources. Personal resources like spare change and global resources like fossil fuels. These blogs inspire me to make small, specific changes in my life all the time, and they also keep me focused on the big picture.

All these role models serve an important function for me: They show me what’s possible in my own life, and make me feel like I’m part of a community of people who do these things, not a lone saver in the consumer sea. Saving isn’t sexy. It’s much more fun to go shopping, gather with friends at a swank cocktail bar or book a winter cruise. Connecting with people, in real life and online, who are choosing a simple, frugal life makes it easier to make and sustain those choices myself.

I think a lot of us tend to live similarly to those around us. No matter how much we may try to eschew it, we subconsciously keep up with the Joneses. The trick is to encourage simplicity and frugality by cultivating close relationships with people who are living the way we want to live, and spending the way we want to spend.

Who are your financial heroes? Who has inspired you along the path to frugal living, or helped you stay focused on your goals? How do financial role models influence you?

Source: getrichslowly.org

Apache is functioning normally

After a relentless series of 10 interest rate hikes within a span of 15 months, the Federal Reserve’s Open Market Committee is poised to pause or potentially halt the upward trajectory as inflation shows signs of subsiding. As inflation gradually inches closer to the Fed’s target average of 2%, the inevitable outcome looms: a subsequent decline in interest rates

That means that the relatively good times bank savers have been experiencing may already have topped out. A look at average rates for certificates of deposit gives a glimpse of how bankers are seeing the future. According to recent national surveys from Bankrate.com, the average rate on a 1-year CD was yielding 1.68% while 5-year certificates offered yields 1.23%. With short-term rates starting to equal or even trend higher than long-term rates, it’s a signal that bankers are betting on long-term rates declining.

Right now, however, savers can keep their good times rolling by locking in rates on long-term CDs. According to the SmartAsset CD comparison tool, savers can snag a rate of 4.4% on two-year CDs, producing an annual percentage yield (APY) of 4.5%. That’s only slightly below the 12-month rate of 4.88% (5.1% APY).

For help making the right CD choices for yourself, consider working with a financial advisor.

How to Get the Most Out of CD Investments

At TIAA bank, savers can find a 12-month rate producing 4.75% APY but sacrifice just a bit of yield to lock in a 5-year certificate at 3.95% APY. The online Bread Savings (formerly Comenity Direct) offers a similarly yielding 4.25% APY 5-year CD, with the yield trimmed just a bit from the 5.2% APY produced by the banks’ 12-month certificate.

It can seem tempting to grab a higher-rate, shorter-term certificate right now, but the question is where savers will be able to take their money when it comes time to roll over their cash. When a 12-month CD paying 5% now expires a year from today, the only option for reinvesting could be CDs with yields lower than today’s long-term rates. In the year leading up to the pandemic, the average 5-year CD rate was a meager 1.1%.

When it comes to comparing CDs, rates can be listed as the stated interest and as the annual percentage rate (APY), which calculates the compounded yield of the rate after 12 months. In addition to the stated rate, the APY calculation also is based on how frequently interest is compounded. If a CD compounds annually, the stated rate will be the same as its APY. If the APY is higher than the stated rate, compounding takes place more than once a year.

Since 2020, long-term CD rates have gone from averaging 1.14% for 5-year certificates to as little as 0.26% – close to a record low – at the end of 2021 before climbing back up to 1.17% in February. The highest rates recorded in the past several decades occurred during the 1980s, when inflation pushed rates well into double-digits, with six-month CD rates hitting a state rate of 17.98% in August 1981.

The Bottom Line

Certificates of deposit, along with other insured bank products such as savings accounts or bank money market accounts, are good places to safely deposit cash. In most cases, however, those types of accounts won’t provide the growth needed to build a retirement fund that isn’t drained by inflation or produce the earnings required to support a potential 30-year retirement.

Investment Tips

  • A financial advisor can help you put together a strong investment strategy. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Fidelity recommends that you have 10 times your annual income saved for retirement by age 67. To find out if you’re on track, try SmartAsset’s retirement calculator. This free tool will estimate how much you’ll have when the time comes to retire.

Photo credit: ©iStock.com/Inside Creative House, ©iStock.com/Andrii Dodonov

Source: smartasset.com

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Save more, spend smarter, and make your money go further

Are you recently engaged and stressed about all of your upcoming wedding expenses? Are you in multiple bridal parties this summer/fall? Are you a newlywed who has questions about managing your finances as a married couple?

We’re partnering up with Vera Gibbons, Mint Contributor and Personal Finance expert, to host a live #MintBrides Twitter Chat this Wednesday, July 16th from 6p.m. to 7p.m. EDT where we will be discussing all kinds of wedding-related budget advice with two of our favorite bridal bloggers.

Hosts: @Mint and Personal Finance Expert, @Vera Gibbons

Participants: Broke Ass Bride (@BrokeAssBride) & Junebug Weddings (@junebugweddings)

Make sure you follow Mint (@Mint) and Vera Gibbons (@veragibbons) on Twitter so you can jump right in. Use the hashtag #MintBrides to search and select the “All” search option to follow the chat in real time.

Save more, spend smarter, and make your money go further

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Source: mint.intuit.com

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This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

Zero based budgeting is a process where every dollar that comes in goes to the number one priority.

It’s an effective way of prioritizing your money and executing properly, but it can be hard to know where to start when you are just getting started with this new system.

Budgeting can be a nightmare when you don’t have the mindset and tools to make it easier.

So many people struggle with money- they are overspending on things their family doesn’t need or doesn’t enjoy, which causes stress in their lives. But if your goal is financial freedom, it’s time to learn about a new budgeting system.

If you have a desire to:

  • Spend less than you make
  • Get out of debt
  • Save money faster
  • Become financially independent

Then, you are in the right place! Let how easy and simple zero based budgeting really is!

Decide what you want your budget to achieve: a zero-based budget forces you to think about what you want your money to do, rather than just accepting the status quo.

If you want to use zero based budgeting but aren’t sure where to start, this article will guide you through setting it up in an easy and effective way.

What is zero based budgeting?

Zero based budgeting is a financial planning strategy where every dollar in the budget has a specific purpose. With this type of budget, it can be helpful for those looking to get their finances in order or who want more control over their spending.

A zero based budget is when you start from scratch every month and assign every dollar a job.

Income – Expenses = $0

You begin by calculating your income for the month, then subtracting your known expenses. What’s left is $0, which means you have to get creative with how you’ll spend the rest of your money.

You can use a zero based budget template to help make this process easier.

What are the benefits of using a zero based budget template?

There are many benefits to using a zero based budget template.

Perhaps the most obvious benefit is that it allows you to see where every penny is going. This comprehensive view gives you a clear picture of your expenses and makes it easy to identify areas where you can cut back on spending.

In addition, using a zero based budget helps individuals worry less about their financial health. Since all living expenses are accounted for in the budgeting process, there is no need to panic if an unexpected expense pops up. This peace of mind can be very helpful when trying to stick to long-term financial goals.

A zero based budget template is also easy to follow. The basic plan can be executed without any difficulty, making it a great choice for people who want a simple way to manage their finances.

How to create a zero based budget template?

A zero based budget template can be helpful in tracking your money and achieving financial goals.

There are a variety of ways to create a zero based budgeting template, and no one size fits all approach. That is why we offer a zero based budget template in our shop that you can modify to your needs.

There are a few key things you’ll need to create your zero based budget template. The first is a list of your monthly income, expenses, and savings goals for the year. This will help you stay on track and plan ahead.

The next step is to individually itemize each expense and income. This may be time-consuming but it’s crucial in order to get an accurate picture of where your money is going.

After that, it’s important to track your spending and income on a monthly basis. This will help you see if you’re meeting your goals or not.

It is important to choose the proper zero based budgeting template for your needs.

What are the 5 steps in creating a zero based budget?

There are five steps in creating a zero-based budget. This system was made popular by Dave Ramsey.

We will quickly outline the five steps to make your first zero based budget. Then, we will go into detail on creating your own zero based budget.

  1. List your income
  2. List your expenses
  3. Subtract your income from expenses to reach zero
  4. Track your expenses.
  5. Make a new budget for the next month or pay period.

One way to ensure success by following a zero based budget is by taking small steps instead of making large changes all at once–this can be difficult for some people who are used to living paycheck-to-paycheck.

Another suggestion is to allow yourself some “fun money” so that you don’t feel too restricted while trying to adjust your spending habits.

By following these tips and using a zero based budgeting template, you can successfully get yourself back on track financially!

How to Create a Zero Based Budget

Zero-based budgeting is a system of budgeting that has been gaining in popularity since the introduction of personal computers and spreadsheets. It encourages decision-making based on values and not numbers, which is important in a time when numbers are often used to make decisions.

Zero-based budgeting allows you to start with a clean slate and create your own vision of what the future looks like.

You will need to gather all of your financial information together, including your income, debts, and expenses.

Step # 1: List out your income

The first step in creating a zero based budget is to list out all of your income.

This should include job income, side hustles, rental properties, alimony, child support, and investment income. Once you have a complete picture of your income sources, you can start to make decisions about how to allocate your money.

It is important to decide how you plan to budget your money on a monthly basis, bi-weekly basis, or by paycheck.

Step #2: Tally up your expenses

Be sure to include any regular expenses you have as well, such as rent or mortgage payments, car loans, and credit card bills.

Think of all of the budgeting categories you need for absolutely everything.

This will help you track your spending more closely and make it easier to find areas where you can cut back. Some people recommend creating as many budgeting categories as possible, including for example:

  • Housing
  • Utilities
  • Food
  • Transportation
  • Entertainment
  • Health care

If there’s something that doesn’t fit neatly into a category, come up with a name for it that will help you remember what it is. For example, “clothes” or “misc.”

You’ll also need to factor in any debts you may have.

Step #3: Get your budget to zero

Once you have a full list of your expenses, it’s time to subtract that amount from your income. Then, figure out if you are close to zero.

This is where you will likely have to make adjustments.

There are two ways to get your budget to zero- either spend less than you make (aka cut spending) or make more money.

If you want to stay out of debt and save money, it’s important to do one or both of these things. It may be difficult at first, but with a little bit of effort, you can get your budget under control and start saving for the future.

Budgeting is an extremely important tool to have in your financial arsenal. It allows you to have more control over your money and can help you make more of it. By following a few simple steps, you can get your budget to zero and start saving for the future.

Step # 4: Track your expenses

In order to be successful with a zero based budget, you have to be willing and able to track your expenses. This means being mindful of every penny that goes in and out of your account – ALL month long!

By tracking your expenses, you’re ensuring that every penny goes into the right place. This enables you to see where your money is going and how you can save in specific areas.

Expenses tracking apps allow you to easily record, categorize, and analyze your spending. They let you see how much money you spend on different categories of items from groceries to travel and more. Some of the most popular apps are Simplifi, You Need a Budget, and Qube Money.

This also makes tax season less daunting because you’ll have a complete record of all of your transactions.

You can also use this information to refine a realistic budget that works for you.

Step # 5: Make a new budget for each month or paycheck

Creating a new budget every month is an important part of zero based budgeting. This helps ensure that you are always aware of your current financial situation and can make changes as needed.

It is best to create your budget before the month begins, so you have time to adjust as necessary.

A zero-based budget is a great way to get your finances in order. It can be tough to stick to, but it’s worth it because it forces you to pay attention and make adjustments.

This is why the budget by paycheck method has gained popularity in conjunction with the zero based budgeting system.

Tips to Make Your Zero Based Budget Successful

It can be difficult to stick to a budget, but there are ways to make it happen.

Here are a few quick budgeting tips:

  • Make a list of your necessary expenses and stick to it.
  • Cut back on unnecessary spending.
  • Live within your means.
  • Find cheaper alternatives to your regular expenses.

In addition, here is what you need to make sure your money is spent where you want and not following the status quo.

You need to learn which payment type is best if you are trying to stick to a budget.

Know your End Goal

What do you want your money to do for you?

Too many times, we let life dictate how and where we want to spend money. Then, we are always chasing from behind.

To truly make your money work for you, decide on three core areas you want to spend your money. Then, make your budget reflect those values.

Understand the Flexibility of Zero Based Budget

Zero-based budgeting is a great way to stay flexible with your finances. There are no set rules to follow, and you can adapt as your life changes. The goal is to always be mindful of your spending and make sure that every penny counts.

Unexpected expenses are going to pop up from time to time, so it’s important to have some flexibility in your budget. That way, you can handle these unexpected costs without breaking the bank.

Put Most Important Expenses at the Top

When creating a zero based budget, it is important to start with the most important items and work your way down.

This ensures that you do not miss any essential expenses and that you are able to stick to your budget. It is also important to be realistic about what you can afford and to make sure that you are flexible in case of unexpected expenses.

Put in a Cushion or a Buffer

When starting a zero based budget, it is important to be realistic about what you can and cannot do.

Some people find it helpful to have a cushion in case of unexpected expenses, while others prefer to keep their spending as low as possible. It is important to find what works best for you and stick to it.

Additionally, remember that your goal should be to live within your means, not spend less than you make.

Look Ahead

When creating or following a zero based budget, it is important to be mindful of any upcoming events that may require more money.

This includes things like holidays, birthdays, and special occasions. If you know these events are coming up, you can plan for them in your budget and make sure you have the funds available.

Check out ideas for bill calendar strategies.

Sinking Funds

One of the most important things to remember is that you need to plan for big-ticket items and one-off events. This can be done using sinking funds.

Sinking funds are special savings accounts that are specifically designated for planned expenses.

You put money into the account over time until you have saved enough to cover the expense. This allows you to avoid breaking your budget when something unexpected comes up.

Learn how to use sinking funds.

zero based budgeting Example

Zero based budgeting is a way of organizing your finances in which you spend money only on things that have an actual impact on your financial situation.

This method can help you stay mindful of how much you are spending and where it is going.

It can also help you to make better decisions about what needs to be paid off, saved for, or invested in.

Here is a basic zero based budget example:

Can You Make a Zero-Based Budget With an Irregular Income?

Zero-based budgeting is an excellent way to manage your finances when you have an irregular income.

Regardless of how much money you earn each month, you can create a budget that will help you save money and make the most of your income. With a zero-based budget, every penny has a purpose and you can be sure that you are making the most of your resources.

It is also helpful to “age” your money by at least one month. That means your April income will be paying your May bills.

The Best Zero Based Budget Templates and Apps

Zero-based budgeting is a methodology of budgeting that starts with the assumption that how much one has at the beginning of each period should be used to purchase only those things needed. This is different from the traditional budgeting practice of starting with how much one has at the end of the last period and using that as a basis for what needs to happen during the next period.

There are a number of zero-based budget templates and apps that are available on the internet. The following seven are some of the most popular:

1. Tiller Money

Tiller Money is a budgeting app that allows you to create a zero-based budget. This means that every dollar in your budget has a specific purpose.

It has a “Foundation Template” feature that allows expenses to be budgeted against goals in order to make sure the amount of money actually spent is at a minimum.

This allows you to create a zero based budget quickly and easily.

You can try Tiller Money for free for 30 days, and the annual cost is $79.

2. Simplifi by Quicken

Simplifi by Quicken is a budgeting app that takes a different approach to budgeting.

Rather than starting with your current income and expenses and trying to adjust them, Simplifi starts with your savings goals and works backwards. This can be helpful for those who have trouble sticking to a budget because it allows you to focus on your financial dreams rather than your current spending habits.

You can set up your own categories, limits, watchlist, and spending plan.

It offers all of the features of Quicken with the added convenience of being able to access it on your phone or tablet.

Another thing that makes Simplifi stand out is that it is ad-free (unlike Mint), which can be helpful if you are trying to stay focused while budgeting.

Enjoy your first 30 days free and then pay as low as $3.99 per month.

3. Qube Money

Qube is an app that helps you create intentional, smart spending habits.

With Qube, you have the freedom to manage your money with real purpose. Qube helps you stay on top of your finances by giving you a clear picture of where your money is going and how much you have leftover each month.

Qube Money is a budgeting tool that helps you manage your money by automatically ledger transactions and allowing you to divvy up your money into qubes. This makes it easy for you to see how much money you have in each category and click to spend.

Get started with Basic for free with 10 qubes. Upgrade to Premium for $6.50 per month.

4. YNAB

You Need a Budget (YNAB) is a popular method of budgeting that requires you to spend money from the previous month’s income. They stress “aging your money” to break the living paycheck to paycheck method.

Each month you start from scratch each month, accounting for all of your income and expenses.

YNAB is best known for its awesome support community and training.

It offers a free trial for 34 days, after which it costs $84 per year.

Best Zero-Based Budget Template For Debt Payoff

It is useful to make a debt payoff plan that starts from the zero level. This will allow you to track your progress and adjust your budget as necessary.

Using Tally is a great tool when paying off debt.

Time for you to Start with the 0 Budgeting Method

A zero based budget is a financial planning strategy where every dollar in the budget is assigned a purpose. This differs from traditional budgeting where the focus is on last month’s spending and last year’s income.

With a zero based budget, you start fresh each month and assign every dollar a job or responsibility. This way, you can ensure that your money is being put to its best use.

When you use a zero based budget template, you are able to track every dollar that you spend.

This comprehensive view gives you a clear idea of where your money is going and where you can cut back on spending. Additionally, using a zero based budget template makes it easy to see if there have been any areas where you could save money.

The best part is you are comfortable knowing that all of your living expenses are accounted for.

This means that you can spend money without worrying about jeopardizing your financial health.

Know someone else that needs this, too? Then, please share!!

Source: moneybliss.org