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Tackle my finances

How to Avoid the Pitfalls of These Common Budgeting Tips

tackle my finances

Overspending is easy to do. Almost 64 percent of Americans have experience with credit card debt.1 You’ve heard many money savings tactics before, but are you aware of the potential pitfalls? Here are some common budgeting tips, and how you can avoid the unintentional downsides that might come with each.

Tip 1: Making a budget

First and foremost, you should make a budget to help kickstart your savings goals. By checking out your bank statements, you can create a DIY budget with a simple grid. This is an easy way to track your spending and boost your savings. Take a look at the below monthly DIY budget example* to help you get started.

Expense

Amount

Housing

$1,500.50

Transportation

$776.75

Health care

$413.17

Groceries

$566.66

Entertainment

$237.67

Total

$3,494.75

*Numbers based off Annual Expenditures of 55-64 year olds, 2014 from the Bureau of Labor Statistics

Pitfall: DIY budgets only work if you’re honest with yourself and commit to following your plan. Most banks provide assistance with financial planning if you need extra help.

  • Call your bank or stop by to see if they have budgeting resources available for you to help manage your spending.
  • There are also apps available to help you create and track a budget. These apps are hooked up to your bank account or credit card and send you notifications about how your spending habits compare to your budget.
    • Mint: Mint is a free app that tracks your spending. Your spending is divided into categories. Each category has a percentage out of 100, so you’ll see how much money you’re dishing out for each. Mint also sends you notifications on how your doing with your budget.
    • You Need a Budget: This budgeting app helps you keep tabs on your current spending trends. There’s also a newsletter you can subscribe to that provides you with suggestions on how to increase your savings.

Using these apps alongside your DIY budget can help you understand spending habits and help keep you accountable.

Tip 2: Cash vs. Credit Cards

Switching to cash certainly has its benefits. And there’s something to be said about watching your money leave your hands. However, you don’t have to swear off of credit and debit cards completely. If you use your credit cards responsibly, you can build your credit. Having good credit comes with excellent perks. Credit card providers also offer incentives, which include:

  • Cash back points. You can accumulate these points in your bank account from using your credit card. These points can be redeemed in several ways, including travel perks or money back toward your card.
  • Travel perks. Speaking of travel perks, there are credit cards available that will give you discounts on travel expenses. For example, you can use your credit card to get airline points whenever you use it. With enough airline points, you can get a discounted (or sometimes free!) flight. This could be a fun way to cross off those retirement bucket-list destinations while earning points!
  • A sign-on bonus. A lot of banks will provide a sign-on bonus in the form of cash to your account. For example, some banks will give you $150 for opening an account and spending a certain amount within three months.
Pitfalls: Using cash means making sure you plan ahead so you have the money you need in hand – and that you don’t overspend. Using credit cards means making sure you pay off your balances on time, in full.2

As long as you stay on top of your credit card balances and stay true to your budget, you’ll be able to boost the balance in your bank account. If you feel yourself slipping up on saving, get back on track by using tools like Debt Payoff Planner or Unbury.me.

Tip 3: Using coupons

Coupons are popular and can be helpful for finding discounts. In fact, 96 percent of Baby Boomers used coupons in 2016.3 You can pick up coupon books from your local grocery store, or check out your daily newspaper to see what they have. There are online websites that can help speed up your coupon search, like RetailMeNot.com.

Pitfall: Coupons may not always save you money. They may just bring an extra temptation to buy items you wouldn’t normally buy. The discounts offered aren’t always for the healthiest items and might just be for sugary and salty foods. Coupons also can take a long time to collect –  time that could be spent taking your grandkids out or exercising!

Plan time to coupon, and limit your use to items that you need, that align with your budget, and that keep you healthy.

Tip 4: Investing in Memories

Spending time with your grandkids is priceless. And giving your children some babysitting relief is also a great part of being a grandparent! Places like landmarks, toy stores and weekend vacations are all fun ideas for creating memories with the kids.

Pitfall: You want to spoil your grandkids, but those outings can add up financially. Don’t break the bank!

Here are a few ideas for places that grandkids will love and that are easy on your wallet:

Zoos
Zoos are great because you can spend the whole day there! Your grandkids can run around and learn about wildlife while spending time outside. Zoos often have senior discounts, too. Groupon is a good website to check out for discounted zoo tickets.

Parks
Parks are another fun place to take your grandchildren. The kids can hang out on the playground and socialize with other children. You’ll only need to bring a few dollars for the ice cream truck! If you’re not sure where there are parks near you, use Google Maps. There are even ratings and reviews available for each park.

Public pools
Take your grandchildren out for a day at the pool! Swimming and splashing around is good exercise for both you and your grandchildren. Admission prices are usually pretty reasonable if not free! Look up local listings on Yelp to help with your search if you need it.

Local library
Libraries often have events catered toward kids. Bring your grandkids to the library for a day of coloring, storybook reading or board game playing. WorldCat.org can guide you to the library nearest you.

Farmers market
Do you have a vibrant community farmers market? Take your grandkids the next time you go! Most farmers markets provide kids with fun activities to do, like creating collages or finger painting. They can also meet actual farmers who can teach them the benefits of healthy eating and how to grow plants on their own. Never been to a farmers market? Find one near you by searching LocalHarvest.org.

Stay on track with your savings by following these budgeting tips but keeping in mind their potential pitfalls. If you need some extra assistance with your savings, our advisors are always here to help!

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC.  Investment advisor representatives offer advisory services through Mutual of Omaha Investor Services, Inc.

Sources:

1 Issa, E. E. (2017, June 22). Web page: NerdWallet Survey: Nearly Half of Americans Emotionally Overspend. Retrieved June 26, 2018, from https://www.nerdwallet.com/blog/credit-cards/credit-card-debt-stigma-2017/?trk=nw-wire_305_0_26180.

2 Barba, R. (2018, February 22). Web page: Should You Let The Bank Limit Your Spending? Retrieved June 26, 2018, from https://www.bankrate.com/personal-finance/smart-money/should-you-use-bank-fintech-app-to-set-spending-limits/.

3 Carter, B. (n.d.). Web page: Coupon Statistics: The Ultimate Collection. Retrieved June 26, 2018, from https://blog.accessdevelopment.com/ultimate-collection-coupon-statistics.

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