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Cutting Your Budget: Where to Start

December 16, 2016

A monthly budget is not always one-size-fits-all. You may find a budget that works perfectly for a little while, but your financial situation is not likely to stay the same. Big life changes can come along, both planned and unplanned, that require a budget adjustment. Whether preparing for a new baby, saving for a down payment on a home, or going through tough times such as a job layoff or large medical bills, you may find yourself cutting the budget. If your budget already seems tight, it can be hard to determine the best place to start. Here are a few quick tips for cutting back on your monthly expenses:

  • Be Proactive

Cutting a budget for significant life changes pays to start early. Some can be easier to prepare for than others — a new baby comes with a few months to save as much as you can, and a home can be purchased on your own timeline when you are financially ready. You may try to plan your life as much possible, there are always unexpected changes and challenges. Even if there are no planned life changes on the horizon, it is essential to build up a solid emergency fund. The general rule of thumb is to save around three to six months of living expenses. A solid emergency fund that in case times get tough, you will have something to fall back on.

  • Assess Your Variable Expenses

When cutting your budget, looking at your variable expenses is a great place to start. Your variable expenses include amounts that fluctuate every month. Examples of variable expenses are groceries, dining out, entertainment, and clothing. Variable expenses are good to start with because you control how much you spend in these categories, and they are often easiest to cut back on. As much fun as going out for dinner and a movie is, it may be considered a luxury for the phase of life you are in. Making meals at home is exceptionally less expensive than eating out. In addition, renting a movie or having a game night at home with the people you love can be just as satisfying as a night on the town. To save money on groceries, looking into the benefits of meal planning can be helpful.

  • Find Ways to Slash Fixed Expenses

Obviously, you may not be able to immediately cut back on expenses such as rent, mortgage, car payments, or education loan repayments (although student loans could potentially be refinanced to save you money or lower your monthly payment). However, there may be other fixed expenses that you can eliminate. For example, cutting out cable — even temporarily — can save you a surprising amount of money. If you have a landline, you might be able to get rid of it and solely use your cell phone. Utility bills can rise in the winter months, so ensure you are diligent about turning off your lights, unplugging appliances, and not turning up the heat too high. If necessary, do some research to make sure you are getting the best deals on cell phone service, internet, and car insurance. While you won’t be able to completely exclude all of your fixed expenses, with a little effort, small savings spread over several categories can add up to a cumulative amount that creates more flexibility in your monthly budget.

Getting Through Tough Financial Times

Throughout life, there are many circumstances that may change your income or expense levels. Whether you are cutting back to consciously save up for an exciting life event or to unexpectedly adjusting to a financial challenge, it is essential to reevaluate your budget to adapt when these changes occur. Though it may seem daunting at first, you might be surprised by how much you can save when you put forth some thought and effort.

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2019-02-18
10 Questions to Ask when Hiring a Financial Advisor

Financial experts run the gamut from tax preparers to CPAs who can help you with a business, to people who specialize in things like drafting wills or advising you for retirement. Finding the right financial advisor can seem like you’re dating again. With all the questions and long-term goals, you’re looking for in a match. How do you find the right type of expert, ask the right questions, and get the help you need?   First, like in dating, you need to know what you’re looking for. Think about what you need and it will narrow your search. It’ll be easier to seek out a financial advisor once you have a title or type of business to seek out.  With easier access to more information than ever before, reading up on topics is a piece of cake (and common) for most of us. What are you looking to do? Start searching based on your needs, so you can develop your own list. Create your own list of questions specific to the service you need.   Next, ask around and look at websites, reviews, and recommendations from friends and family. There might already be a connection to someone—or many someones—in your network. Once you have an idea of what you want and the type of expert you’re looking for, consider asking these questions.  

What are your qualifications?

Before you start talking to a financial pro, make sure you know what typical qualifications are. You don’t want to hire someone with the wrong education or training for what you need.  According to the Bureau of Labor Statistics in the U.S. the education requirements are a bachelor’s degree. The certifications and licenses required will be dependent on what the advisor is working on.  

How much and what kind of experience do you have in this field?

It’s not necessarily a deal-breaker to have a greener financial pro. It is recommended to know whether your CPA has done the type of accounting you need, or if you are a financial advisor’s very first client!  

What services do you provide?

Even if you’ve sought out a financial expert based on one need, it’s nice to know if they might be able to help you with further services down the road. Plus, websites aren’t always all-encompassing, so you might need some clarification before you start working together.  

What are your fees? What is your fee structure?

Some experts take a percentage of the money you make, and others have services based on flat rates or monthly fees. Knowing how they get paid helps you understand what you’re paying for their services. Advisory HQ has a list of sample fee structures based on a recent report they created for financial advisors. The charts provided will give you an average reference as to what the typical costs are for management of assets and other financial management costs.  

What are the total fees?

In addition to your contributions and the fees of your expert, there may be other fees you need to pay. For example, if you are advisor uses a mutual fund, there may be fees associated with that account that will be added to the advisor’s cost.  Ask what your all-in costs are and be aware of how even small fees can affect your overall outcome.  

Are you a fiduciary?

A fiduciary works in your best interest. They have both, ethical and legal duties to act in the best interest of the party to whom assets are being managed. For example, shareholders, lawyers, and guardians are fiduciaries. The biggest difference between fiduciaries and other financial advisors, fiduciaries cannot act on their own interest. They cannot benefit personally from the management of assets while other financial advisors can.  

What kinds of tools or guides do you have to help me?

Many financial experts can offer specialized tools or calculators. These tools will help you understand the financial potential of their services. Ask if they have more information or collateral they can send home with you for your own research and learning.  

What services are available through your website or app?

Many millennials prefer to do tasks digitally. We want the ability to check on accounts 24/7 on our phone or computer. Knowing if there is an app or website that is available and mobile friendly is helpful when picking an expert.  

How often should we meet or check in? What would our relationship be like?

When you first start a retirement plan you might not see much growth or movement for quite a while. Therefore, it’s likely won’t need to interface much with your expert. Once you have hired a financial pro, don’t be afraid to ask them some questions. You should be comfortable or checking in whenever you’d like to get their perspective. You could set up a yearly call about investments for a more regular update.  

What kind of goals should I set?

You and your financial expert will want to have a conversation about why you’re looking for this product or service and what you hope to get out of it. He or she will help you understand if your desires are on point for what they can offer.   Finally, you want an expert who is a good fit. Some people have a special situation like owning their own business or freelancing. In that case, you’ll want a financial expert who understands your needs. You could want an advisor who cares more about educating clients versus someone who simply gives their opinion on what you should do.   Beyond that, you might have preferences that would be important to talk about during an interview. Many millennials have strong feelings about what causes to support. Did you know you can ask a financial advisor to ensure that your investments aren’t doing anything you wouldn’t agree with? For example, you can have a financial advisor invest in companies that are known for being socially or environmentally responsible only. You can also avoid investments that include controversial companies or those with values you don’t agree with.  It’s okay to shop around and find someone whose personality or experience fits best with you! It isn’t always a guaranteed marriage, but you have to start somewhere.  

6 Reasons for Hiring a Financial Planner 

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Women walking on college campus.
2019-02-13
Scholarships to Save Money on Student Loans for College

People have all kinds of amazing hopes and dreams for what to do with their lives. From those passionate about teaching and making a difference to talented analysts who want to help steer the ship. There are so many incredible careers to choose from, but once you pick the path it’s time to think about school. How do you make that dream of going to school a reality?   Financing an education can be challenging, but there are options and ways, even if you don’t have a nest egg for tuition. One option that is worth looking into is finding scholarships to save you money on student loans for college. Have you checked out what’s available? Here are some things to consider in your search.  

Look for scholarships based on need.

All types of people from all different backgrounds go to college, but some are at a disadvantage when it comes time to pay for school. For instance, some students can’t get student loans for college if they don’t have co-signers but might qualify for federal loan programs that don’t have the same requirements. Some scholarships aim to help these people specifically—like people who are more likely to need aid because they’re non-traditional students with children or over a certain age, or they are the first generation in their family to attend a university. There are also options for students who have been on other government aid programs as children or teenagers in a low-income family.  

What kind of scholarship fits your abilities?

Lots of people receive scholarships for any number of abilities—either because they are gifted academically or because they excel at a sport or activity. Talk to your school counselor or other college resources about your grades and test scores. It might be worth it to retake something like the SAT if you are pretty close to qualifying for academic scholarships. If you’re just starting to look at scholarships, now probably isn’t the time to become a master volleyball player or flutist, but scholarships for activities like those do exist! So if you are looking for ways to save money on student loans for college by getting a scholarship, don’t forget to search based on your extracurricular. Here are some common scholarship types provided based on extracurricular.  

Community Service Scholarships

Have you been busy volunteering? If so, you’ll want to look into community service scholarships. Many institutions hope to have students who make a powerful impact in the community. This scholarship is a great option as there is no special talent required it just takes time and dedication to complete.   Now we’re not saying to volunteer only for a scholarship, we’re just saying to try it out. Who knows, you may even like volunteering and actually have fun and make new friends!  In addition to making new friends, having fun, and saving money on student loans for college volunteering can expose you to new environments and things that you may have otherwise been unaware of. If you’re volunteering with an organization, be sure to ask them if they offer a scholarship.   Segal Americorps Education Award Do Something Scholarships Youth Changing The World Tylenol® Future Care Scholarship  

Creative Scholarships

Creative scholarships are just what you would think they are. These are scholarships provided to users for unique and creative creations. These scholarships consist of anything from designing a logo to playing a musical instrument. When you’re applying to a creative scholarship be sure to include an impressive portfolio of your additional work.   Doodle for Google Create-A-Greeting-Card Scholarship Stuck at Prom Scholarship Contest Shout It Out Scholarship    

Academic Scholarships

Academic scholarships are the most common. These scholarships are often based on your GPA, leadership, and ACT or SAT scores. Typically academic scholarships are provided by the institution but private academic scholarships can be another great way to pay for college. On your application, you’ll want to be sure to include any additional activities you are involved in. Some private academic-based scholarships will require the student to pursue a specific type of degree.   Shell Incentive Fund Scholarship USRA Scholarship Awards Alpha Chi Omega Foundation Scholarships The AAF-Tenth District Scholarship SouthEast Bank Scholars Program    

Look for fruitful memberships.

If you or your parents are members of a fraternal organization, church/denomination, or if you work in a particular industry you may qualify for a scholarship. Some companies even offer scholarships to employee families. If you were a member of an applicable student group in high school, then you may qualify for a scholarship based on this. There are even scholarships for people who have survived cancer. Talk to your parents and other family members about memberships you may not be aware of!  

You might qualify for employer-sponsored scholarships

In an increasingly competitive market, employers are doing more to find and retain top talent. Do you work for a company that offers scholarships? Check out this list of companies that offer scholarships. Everywhere from fast food restaurants and service jobs to large corporations offer financial aid and scholarships to their employees. If you’re not sure, talk to your HR person and see if you qualify. It’s worth a try!  

Get the scoop on where to search.

School counselors are the first place to check for scholarship opportunities. You might be able to apply for a local scholarship from a company in your region through your high school, or your college or university of choice might have scholarships for attendees. You can also take your search to the Internet and look for ideas, search based on your specific requirements or areas of interest, and get information on how to apply. Check out this scholarship search tool from the Department of Education.   If you’re looking to save money on student loans for college, make sure that you check for scholarship opportunities every semester. Student loans can be a great tool and easily manageable if you’re informed, so don’t be afraid to ask questions and check out all of your options. Do your best to decrease the amount you need to take out in student loans to pay for college.  

FDIC Backed and Why You Should Care

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Creepy campfire outside under the stars.
2019-02-07
Don’t Put Out the F.I.R.E with a Lifestyle Creep

Unless you’re on a desert island somewhere, it’s likely you’ve heard of the F.I.R.E movement. If you haven’t Gilligan, the F.I.R.E movement stands for “Financial Independence, Retire Early.” Basically, it’s a movement started in which many finance savvy people increase their savings in hopes of retiring early and living their best life. Sounds great right? It may sound great but there are really only two ways to participate in F.I.R.E and that is increasing your income level or increasing your savings. So, how does the Financial Independence Retire Early movement relate to lifestyle creep?

What is Lifestyle Creep?

Lifestyle creep might be a term you haven’t heard before, but you’ve probably experienced it or witnessed it. As your discretionary income goes up, your lifestyle becomes more expensive. It’s that train of thought that can really get you in trouble with your bank account. You know the thought, the good ole “I worked really hard this week I deserve a new purse.” That is where lifestyle creep really starts.   If you suffer from lifestyle creep you’ve probably also thought of things like. If you can afford a better car, why not drive a better car? If you can afford an apartment without roommates, why have roommates? So, what’s wrong with these thoughts, because if you can afford it, then you should do it, right?  

Lifestyle Creep and Financial Independence Retire Early Movement

It’s a really delicate balance when income goes up and you feel entitled to nicer things. Suddenly the ability to afford something makes your current situation or current belongings seem like they are not enough, whereas they were just fine yesterday. This is a nightmare for most people involved in the F.I.R.E Movement. So when does it make sense to increase your budget based on higher income and when should you hold off? Here are some things to keep in mind that will keep you away from lifestyle creep and keeping you in the race of Financially Independent Retire Early movement.  

Always “pay yourself” first.

To pay yourself means to invest in yourself—specifically, your future self (oh hey, F.I.R.E). Increase your contributions to your retirement when your income increases. If you get a raise every year, set a reminder or put your retirement contribution on autopilot to also increase by 1% (or whatever amount works for you). If aiming to be in the F.I.R.E movement you may want to contribute over 1%. This is how people end up “maxing out” retirement contributions, without ever feeling like they are taking a hit in the present to save up for the future. Just ask anyone who’s ever done so. They’ll tell you it may have been the hardest thing they have ever done at the time, but their future self was really grateful!  

Look at the big picture.

If you get a job offer and will suddenly make 40% more, but your commute will be long, does it make sense to move closer to work if your residence will also cost more? That depends on the big picture. Maybe the amount of time you’ll lose to commuting is worth more than the higher rent or mortgage? Maybe, you will be able to get a house in a better school district, which fits with your long-term plans?  If the commute is farther with a lower mortgage, and you can pay down debt or increase your savings. You need to run the numbers. Check out our below examples of two different scenarios that we estimated. Please note that these are estimated costs.  

Scenario #1

For example, let’s say that you work in Manhattan, New York… You currently live in Blairstown, NJ and live rent-free thanks to Mom and Dad. Your commute to NY takes 4 hours by bus and costs about $400 a month. If you pay $400 x 12 months = $4,800 a year spent on commuting In 2019 there are about 250 Business days (excluding public holidays and weekends) 250 business days x 4 hours = 1,000 hours a year you spend commuting.  

Scenario #2

Let’s say that you move to Hoboken and have a roommate. You pay $1,000 a month on rent. Your commute is about 1 hour a day. Let’s say it costs about $150 a month to commute. $1,000 a month x 12 months = $12,000 a year on rent $150 x 12months = $1,800 a year on commuting costs $12,000 year rent + $1,800 year commuting = $13,800 a year on commuting and housing 1 hour x 250 business days = 250 hours a year spent commuting   Now, this example really gives insight into that big picture. Yes, it costs more to live in Hoboken and you have a roommate, but look at that time saved! If your time is of high value to you, Scenario #2 is likely the best choice for you. If you are participating in F.I.R.E and want to save money or pay down debt as much as possible, Scenario #1 is likely the right choice for you. Regardless, which option is personally best for you, understand these are the types of numbers to run when looking to make big decisions.  

Do I need this or do I just want it? The treat yo’ self trap.

Let’s say your discretionary income goes up, should you get that household repair or a non-urgent medical procedure? By all means, this is not an example of lifestyle creep and you should use your higher income to make it happen. Now, if you find yourself flush with cash and jealous of your neighbor’s new car, you should pause.  If you believe that you have worked hard enough to deserve a big trip. Planning a vacation just because you can, is an example of lifestyle creep. We aren’t saying you don’t deserve a vacation, but that vacation should be planned on a responsible budget.   When making any purchasing decisions ask yourself, “Are these wants more important than other needs?” We’d recommend thinking long-term when it comes to making purchasing decisions. What’s more responsible, paying off debt and continue reaping the reward of not having high payments or added interest or making a purchase like a car that you don’t “need”? Maybe there is a compromise like paying off your current car and setting a goal to upgrade next year, or maybe you can plan a trip for next year and save for it while you are concurrently paying down debt.   It’s dangerous to deserve better. We are constantly bombarded with flashy advertising, slick marketing, and more choices than ever before. It can be really easy to think that you deserve something better, but in reality, is that new item really going to bring you long term happiness and security? Many participating in the F.I.R.E movement will say items are just items and that real happiness comes from relationships and memories.   The F.I.R.E mindset can get even tougher when many of us have had parents who treated us like the most special people ever who gave us what we wanted. That’s not a bad thing until you start making decisions based on what you think you deserve, instead of what you can practically achieve. Thanks, Mom and Dad, but I don’t mind having roommates for another year, or it’s not a big deal to keep driving a car that’s older but works fine.  

Check those budget boxes.

If your discretionary income has gone up either because you got a raise or other costs went down, you need to do some budgeting. Typical steps that personal finance experts advise working on include getting up-to-date on all of your bills if you aren’t already. Second, have a $1,000 emergency fund. Lastly, experts advise people to focus on high-interest debts before building a savings account with 3–6 months of expenses in it. Then look into things like investing, saving for your children’s college or paying off your house!   Achieving a higher income is great! It’s a wonderful feeling when you see your hard work paying off and making life easier. Don’t end up being someone who makes more than enough to live comfortably but you’re still living paycheck to paycheck. Lifestyle creep is so important to recognize and avoid. Keep your financial goals in order and continue to work towards them. Whether your goal is to be Financially Independent and Retire Early or to pay off your debt, you got this!  

Click for Cards and Accounts That Pay You

  NOTICE: Third Party Web Sites Education Loan Finance by SouthEast Bank is not responsible for and has no control over the subject matter, content, information, or graphics of the websites that have links here. The portal and news features are being provided by an outside source – The bank is not responsible for the content. Please contact us with any concerns or comments.