Data breaches occur all the time these days. They hardly make the news headlines anymore. One of the outcomes of these widespread breaches is that some credit card companies have started to provide digital or virtual credit card numbers to their customers. But, is it the best solution for you? Let’s explore what these cards do, the benefits they offer, how to get them, and what you need to know. What Are Digital Credit Cards? A virtual credit card allows you to mask your main credit card number and use a unique card number for each transaction. You can create as many of these virtual card numbers for your actual credit card without jeopardizing your credit score or your standing with the credit card company. Depending on your credit card issuer, you will receive unique numbers for each transaction or a single virtual card to use with all merchants. Many allow you to request a new number for the card as often as you like. While these cards can make online transactions safer for you, they do not make you impervious to fraud. It would be best if you continued to manage your account and monitor transactions for suspicious activities.

Getting a Digital Credit Card

Most credit card providers offer this service free of charge to their customers. You must first have a credit card. Then, you must log into your account with the credit card company and take the following or similar steps:
  1. Go to account settings and look for the “virtual card numbers” or “digital credit card” option and select it. If your credit card company does not offer one of these options in the account settings, they may not yet provide this service.

  2. Download the app that allows you to access the digital card if required. That will make the process of using your credit card easier.

  3. Accept the assigned digital credit card number.

  4. Choose how long you would like that card to be valid. You may have the option of one-time use or the ability to establish specific expiration dates. Suppose you have the type of digital credit card that is different for each merchant. In that case, your expiration date may be pre-selected.

  5. Get the security code for your digital credit card. That allows you to use the digital card just as you would a physical card, except for online purchases.
There may be variations from one credit card provider to the next. However, most will offer something very similar to this. The goal is to make it easier to protect yourself, not more difficult.

What to Be Aware Of?

Digital credit cards are different from payment apps, like Google Pay or Apple Pay. Those services are for use at brick-and-mortar locations. On the other hand, digital credit cards are designed specifically for use with online transactions. Other things to be aware of concerning digital credit cards include the following: The primary benefit is that if a data breach exposes a virtual credit card number, you don’t have to cancel your credit card. You only have to cancel that specific digital credit card number and seek a new one of those. You can continue to use your physical credit card for essential shopping.

Takeaway

Digital (or Virtual) Credit Cards

View Resource Digital (or Virtual) Credit Cards
Some people have one password strategy: a bad one. It is not a good idea to use the same default password for all your accounts. If you have not put much thought into your password strategy, now is an excellent time to give it a try. Creating strong passwords can help prevent casual hacking of your accounts and prevent identity theft and other significant problems. How bad is the problem of stolen account information, including passwords? According to We Live Security, more than 15 billion account credentials for sale on cybercrime forums. You need to make sure these criminals do not have a direct entrance into all your accounts.

Creating Strong Passwords

Creating strong passwords is part art, part science, and part strategy. Despite widespread education about the dangers of using “password” as your password, it remains one of the most commonly used (or some variation thereof, such as “Password123” or “Password1!”) passwords today, according to Consumer Reports. These strategies will help you create more effective, stronger passwords. Think about all the accounts you have: social media, email, banking, utilities, streaming, and likely many more. It is conceivable that you have 50 or more accounts that all need strong passwords. Password managers can help you manage across all your devices without risking repeats or making it easy for hackers to compromise.

Are Your Passwords Compromised?

Suppose you have received a letter in the mail informing you of a data breach that includes your information. In that case, the odds are good that your password is compromised. What does that mean? It means every account associated with your email address that uses the same password is also compromised. What if you have not received a notification? There are programs out there that look out for you, like Firefox Monitor from Mozilla and Password Checkup from Google. You can use these tools to see if your email address has been part of a data breach. These services will notify you via email if a known data breach has compromised your accounts. Of course, there is more you can do to keep your information safe and secure. One of those options is to use multi-factor or two-factor authentication to add a layer of security to your important accounts.

Multi-Factor Authentications

Multi-factor authentication, or MFA, requires multiple forms of authentication to make your account information available to you. Some may send a code via email or text or even require a token in addition to your password. Some recommend against using text messaging for multi-factor authentication because spammers can intercept those codes and access your information regardless. Alternatively, you can use a service like Google Authenticator or Microsoft Authenticator to verify your identity on your behalf once you have registered a specific device with the service. The bottom line is that it is always in your best interest to strengthen your passwords as much as possible. Doing so reduces the risks of others accessing your accounts.

Takeaway

What’s Your Password Strategy?

View Resource What’s Your Password Strategy?
Understanding the cost of living in an area can help you determine the amount of money necessary to cover basic living expenses. It can also describe the amount of money you will require to maintain a specific lifestyle in a given location. Because the cost of goods and services differs from city to city, calculating the cost of living can identify the affordability to live in a specific town. Your cost of living will likely change should you move from one part of the country to another. Using a cost of living index can help you decide if changes in pay are sufficient to warrant your change of address. In other words, the cost of living index enables you to compare the prices of living in one city versus another.

What Is Cost of Living?

Cost of living refers to the costs of meeting basic expenses in one location. It determines how far your money will go in a particular locale. It can be done by cities, states, or even some neighborhoods to help people determine the benefits of relocating. Factors that affect the total cost of living in an area include things like: It is also a great indicator of how your shiny new salary stacks up against your new living expenses.

How Is Cost of Living Determined?

Most people consult the consumer price index (CPI) for information or calculations related to living costs. It is beneficial for comparing the costs of living between two or more areas. However, it certainly isn’t the only option available. There are many websites online that offer cost-of-living calculators. As you can imagine, large cities worldwide and throughout the U.S. have higher costs of living. That includes cities like Tokyo, Hong Kong, New York, Beijing, and Singapore. You cannot forget or overlook the importance of taxes when determining the cost of living. It is not just federal income taxes that should be of concern. There are also state and sometimes local income taxes to contend with: property taxes, vehicle taxes, and countless others, which are higher in some locations than others. Just remember that the basics are not everything. You have to be able to live a little as well. That means you need to consider costs above and beyond living essentials. You should make sure your salary will help you make ends meet while also setting aside funds for savings, investments, and more.

Applying Cost of Living

When you apply the cost of living changes to your new proposed salary, do not forget to factor the numbers with your disposable income for the area in mind. One thing you can do is use online cost-of-living calculators. These can help you determine how much you would need to earn in a new location to maintain your current standard of living. You may be surprised to learn that your new home has a lower cost of living, so even a slight pay raise will give you more discretionary income. Do not let everything hang on estimates, however. Take the time to look around at rental prices, fuel prices, and even supermarket ads online to see how the numbers stack up in real-world comparisons. The bottom line is that cost of living measurements can be valuable tools to determine if a job relocation is the right financial move.

Key Takeaways

Measuring the Cost of Living

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Disposable income is a consumer finance term used to describe your income after the deduction of taxes. It is a significant indicator of personal wealth and one of the tools we use to measure the state of the economy for consumers. There is a lot more to it than that, however. The better you understand the ins and outs of your disposable income, the better handle you will have on your financial situation.

What Is Disposable Income?

Once you take your income and subtract your taxes (federal, state, and local), your required paycheck deductions (Social Security, Medicare, unemployment insurance, back taxes, and court-ordered child support), and any other mandatory government payments (licenses, fees, and permits), what remains is your disposable income. Voluntary automatic contributions from your paycheck for retirement savings or 401(K) plans are not part of disposable income. They are not mandatory payroll deductions. Disposable income is money available for you to do the following with: It includes the amount you can do all the above without having to draw or liquidate assets. The basic formula to calculate disposable income is simple: Gross income — taxes, required payroll deductions, and mandatory government fees = disposable income However, disposable income includes all income received by an individual but not necessarily earned. Examples include unemployment compensations, social security benefits, food stamps, veteran benefits, and welfare payments. Disposable income includes all of these. Disposable income does not include realized or unrealized capital gains or losses from investments.

How Does it Work?

Disposable personal income is a crucial indicator of wealth for the national economy. So much so that the U.S. Bureau of Economic Analysis (BEA) releases information on the changes in disposable personal income from month to month. Ultimately, your disposable income is the money you are supposed to live on from month to month. It is the amount of money upon which you base your budget for each month and annual spending. You can use your disposable income to determine how much you can afford to spend on necessities. That includes rent or mortgage payments, rainy day savings, what you can invest, and what you have leftover for discretionary spending each month. The U.S. Government uses disposable income numbers and other economic statistics to determine the health of the U.S. economy, especially as it relates to personal savings rates. For instance, during recessionary times, the personal savings rate dips into negative territory, indicating that Americans have to dip into their savings to cover essential living expenses.

Disposable vs. Discretionary

It’s important to understand that disposable income and discretionary income are not the same, although people often confuse them. Disposable income is the total amount of money you have to work with for the month. Discretionary income includes money you use to pay for the essentials, which include things like: Discretionary income also includes income you have available for expenses that aren’t necessary for living, such as: As you can see, discretionary funds, while derived from disposable income, are not the same. When working out payment plans and calculating available funds for these instances, some organizations use discretionary income. Others use disposable income to determine how much you can afford to pay each month.

Takeaway

There are critical differences between discretionary income and disposable income. Understanding what disposable income is and how it is different from discretionary income can help you budget more effectively. Calculating disposable income can help you determine how much money you can reasonably apply to certain expenses in your life before you commit to them.

Calculating Your Disposable Income

View Resource Calculating Your Disposable Income
There’s a $400 charge on your credit card for a hotel at which you’ve never stayed. Alternatively, maybe there’s a smaller mistake, the $18 charge for an online newspaper subscription that you canceled a month earlier. You do not have to accept these charges. You can dispute them with your credit card company. Moreover, the best news is the issuer of your card is far more likely to side with you than with the merchants whose charges you are disputing. The odds are high that you will one day have to dispute a questionable charge on your credit card statement. Many of us rarely carry cash today. We pay for drinks and meals on airplanes with our credit cards. We check into hotels online, using our credit card number to complete the transaction. We use our credit cards to pay for restaurant meals, groceries and a night out at the movies. Also, how many of us buy clothing, video games, books and shoes directly from online retailers, paying for each transaction by punching in our credit card numbers. The potential for your credit card information to fall into the wrong hands, then, is higher than it has ever been. The good news is that the Fair Credit Billing Act, which went into effect in 1975, gives you the right to dispute suspicious charges on your credit card. When you dispute charges, your credit card provider will force merchants to prove that the disputed charge was not a mistake. This means that the burden of proof is on merchants, not you. This is a benefit for you, but a problem for many merchants. After all, there are plenty of unscrupulous consumers willing to dispute legitimate charges as a way to “purchase” items for free. Avoid this temptation. Only challenge legitimate mistakes. If you call your credit card company each month with complaints, the odds are that your card issuer will get suspicious. Instead of siding with you, it might flag you for suspicious behavior. To win a credit card dispute, you need to follow just a few simple rules. First, if you notice a strange charge from a merchant, don’t call the merchant. The Fair Credit Billing Act says that you can resolve disputes directly with your credit card provider. This is often the simplest way to a resolution. Credit card companies are required by law to conduct a reasonable investigation of your claims within two months. They are also required to send you a letter notifying you of their decision once their investigation ends. Most card issuers will, as they conduct this inquiry, take the disputed charge off your bill. If they resolve the dispute in your favor, then, you’ll never have to shell out any money because of the disputed charge. Don’t forget, though, that there are exceptions to the Fair Credit Billing Act. The act only applies to purchases that are more than $50. Also, the purchase must take place in the same state as the one on your billing address or take place within 100 miles of your address. Don’t let this stop you from disputing a $20 charge, however. Most credit card companies will take on disputes even if the complaints do not meet the stricter requirements of the law. Credit card companies, after all, want to keep their customers happy. Addressing their billing disputes is one way to do this. The third key to a successful dispute? You need to be aware of the charges made on your card. This means that you must study your credit card bill carefully each month. We are all busy people. However, taking a few minutes to study your monthly credit card bill could uncover some suspicious charges. Don’t ignore them. Dispute them.

Disputing a Credit Card Transaction

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If you lost your job tomorrow, would you have enough money to pay your bills without running up credit card debt? What if your car broke down and you needed $3,000 to get back on the road? Could you come up with the cash? If you answered “no,” then you need to create a rainy day fund, dollars that you can tap in case of a financial emergency. The benefit of such a resource is obvious: If you have one, you will not need to go into debt to handle the economic crises that so frequently pop up. U.S. Consumers Not Ready For Emergencies If you do not have a rainy day fund, you are far from unusual. According to a Bankrate.com August 2020 survey, 4 in 10 adults have the ability to cover an emergency expense that would cost $1,000. Those that are saving have probably not saved enough. The Bankrate.com survey reports that 27 percent of respondents have less than three months’ expenses saved, and 1 in 5 respondents with three to five months. Surprisingly, 21 percent of Americans have no emergency savings at all. No doubt the economic impact of a global pandemic that left millions out of work plays a substantial role in those numbers and when the economy starts to recover they’ll rebound significantly. How will consumers without a rainy day fund cover emergency expenses? Many would borrow from family members or friends while others say they would neglect a different financial obligation. Others would, of course, put the debt on their credit cards. None of these are reliable options. The best bet is to have an emergency fund available. The good news? Starting an emergency fund is not overly complicated. How Much Do You Need? First, you have to determine how much money you need in your rainy day fund. Most experts recommend that you have at least enough money in your emergency fund to cover three to six months of expenses. However, depending on the state of the economy or stability of employing within your profession, you might need more or less. Of course, the more money you have, the better. That is especially true in today’s economy when it is still easy to lose your job and often challenging to find a replacement that pays the same. To determine how much money you need, take a long look at your monthly expenses, including everything from your recurring bills — such as your mortgage payment, car bill, and student loan payment. Then include those costs that vary from month to month — everything from your grocery bills to your utilities and minimum monthly credit card payments. Add these and then multiply them by the number of months you want to cover. If your monthly living expenses come out to $4,000, then you would need $12,000 for three months of emergency funds or $24,000 for six. That is just the start of your rainy day fund. You will also need to budget savings for emergency situations. What if your kitchen sink suddenly springs a leak and destroys the cabinet underneath it? What if your car needs a new transmission? What if you need medical care and your insurance only covers part of the procedure? These are all financial situations that could throw you deep into debt without an emergency fund. It is hard to estimate how much you will need for these emergencies. According to American Family Insurance, you should look to save 1% of your home’s total price for maintenance. So if your home cost $200,000, then you should be looking to save $2,000 to cover costs. It could cost about $900 a year on average to maintain and repair a car that is five years or older. To be on the safe side, then, you might need to boost that $24,000 emergency fund to at least $27,000. That amount might seem like an overwhelming sum of money to save. However, it is not. No one expects you to save your money immediately. You will have to build your emergency fund over time. Start putting away whatever you can each month. That might mean cutting down on unnecessary expenses such as eating out, going to the movies or buying that high-cost coffee on your morning commute. It also helps to set up a direct deposit from your regular paycheck into the account that is holding your rainy day funds. Saving money is easier when you do not think about the money you are stowing away. With direct deposit, you never miss the money you are saving. Where To Save It Experts recommend that you save your emergency fund dollars in an interest-bearing bank savings account. There is a reason for that: You want to have easy access to the dollars in case of an emergency. With a savings account, you will be able to tap your savings quickly. Moreover, if you have your dollars in an interest-bearing account, you will at least earn a bit of money. You will not get rich by having those dollars in a traditional savings account. However, you might make a bit of extra cash. Many financial experts recommend that you start you rainy day fund before you take on other significant financial tasks such as paying off high-interest rate debt. That is because a fiscal emergency if you do not have the cushion of an emergency fund, could throw your financials into chaos. If that occurs, a crisis could send your high-interest-rate debt soaring to new heights. If you want to get financially healthy, the message is clear: It is time for you to commit to a rainy day fund of your own.

Building a Rainy Day Savings Fund

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Leveraging social media marketing can increase your customer base significantly. According to the Pew Research Center’s 2018 Social Media Fact Sheet, social media usage among American adults has grown from 5 percent in 2005 to 69 percent in 2018. Moreover, for the most popular sites, most users are visiting those sites at least once a day. That makes social media a place you will need to be if you want your business to get noticed. However, it can be a challenge to start a social media campaign without any insight or experience. Almost all entrepreneurs currently participate in social media in some fashion; however, many are still not sure how to benefit from it. Using social media marketing optimally includes understanding its power, setting goals, planning social media marketing campaigns, and strategically and consistently utilizing these platforms. What Is Social Media Marketing? Marketing on social media platforms consists of creating a presence on numerous social networks to achieve branding and marketing communications goals. It is a form of online marketing that primarily includes activities like sharing videos, content, and images for marketing purposes. Planning and Goal Setting Before you create your first social media marketing campaign, set business goals and devise a plan to achieve them. If you do not already have set goals for your business, it is essential for you to create them. Consider what you are trying to achieve when marketing on social media sites, who your target audience is, where they spend their time, and how they are using social media. Additionally, determine what message you want to get across to your target audience. You can use social media marketing to achieve key business goals, including: You can only measure your social media ROI once you have established your goals. Other Helpful Tips Some other tips that will be helpful in building a foundation that will serve your brand, customers, and bottom line include:
  1. Provide Quality. Your social media efforts can pay off better by having 100 followers who read, talk, about and share your content, rather than 1000 who disappear after your initial contact.

  2. Have Patience. Success in social media marketing takes consistency and time. Although it is possible to make some quick sales or get some business partnerships on your first attempt, it is far better to commit to the long haul.

  3. Hang With Influencers. Find out who the online influencers are in your industry and hang out with them virtually. Respond to their tweets and Facebook posts, and eventually, they might do the same for you. These will be the people with quality audiences who might just be interested in what you are offering. Make a connection with these people and begin building relationships with them.

  4. Provide Value. If you are using social media exclusively for promoting your products or business opportunity, people will begin to ignore you. You have to add value to the mix. Keep your focus more on creating valuable content and less on conversions.
Available Platforms Facebook Create a business Facebook page. By adding a business page, you can further your conversations with your audience by posting images, articles, and videos that are industry related. You should also pay careful attention to the layout when using Facebook since the visual component is an integral part of the overall Facebook experience. Twitter The Twitter platform lets you broadcast updates (tweets) in 140 characters or less. You can begin by following other tweeters that are in your related industry, which will hopefully garner you followers in return. When making tweets, it is best to mix them up a bit between official-related tweets (discounts, specials, etc.), news tweets and, value tweets. Throw in a little bit of fun and humorous tweets as well. If a customer says something nice about you, be sure to retweet it and always answer any questions that people ask you. Instagram Instagram is one of the most potent social media platforms for visual content. Almost all of it is content consists of photos and video posts. Now with more than 700 million active users, it has become a destination site for those that like to post about food, fashion, travel, the arts and other visually-focused subjects. The other exciting aspect of Instagram is that its post all must originate from a mobile device. Snapchat Snapchat is another mobile-only platform that currently has 150 million-plus app users. Snapchat content is temporary, disappearing from a user’s feed after 24 hours. Snapchat is useful for visual story-driven material and has a strong reach to millennial audiences. YouTube If your business lends itself to product demonstrations or service explanations, take advantage of the popularity of video. YouTube is a fabulous platform for many types of companies to embrace and prosper with as a promotional vehicle. Pinterest Would your business benefit from posting and sharing images? Many small and large businesses alike would, including hair salons, web designers, jewelry stores, restaurants, event planners, and much more can find that Pinterest helps them draw in and engage with existing and prospective customers. LinkedIn While many businesses can benefit from LinkedIn, it is especially beneficial for B2B marketing. It is an excellent platform for small businesses to reach out to other organizations who may be seeking their services. It is also an excellent tool for recruiting employees. Social media marketing will do much more than increase your website traffic and sales. It will also allow you to get a better understanding and learn from your target audience. However, when done right, social marketing can lead to increased traffic, better conversions, and more customers.

Social Media Marketing

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While many lenders and businesses will tell you that you are more than your credit score, the truth is that your credit score matters more than you probably realize. The better you understand your credit score and what affects your score, the better control you can have over your financial future.

Types of Credit Scores

There are two types of credit scores that most people are aware of (however, there are many more!) The most prominent, two, are: The “FICO” score was developed originally by Fair, Isaac and Company, now better known as FICO. Businesses use these scores when making credit decisions. The FICO score can be adapted to meet unique or specific needs based on industry or even types of loans. VantageScore was created as an alternative to FICO by the big three in the business, Experian, TransUnion, and Equifax.It was launched in 2006 and has since remained a force in the industry. Additionally, alternative credit score models and individualized models are used in-house by large corporations. They often factor traditional credit scores into their risk assessments.

Understanding Credit Scores

Suppose you are preparing for a major credit purchase, such as a car or a home. In that case, it is a good idea to get a copy of your credit report to make sure the information is accurate and up-to-date. It’s also a good idea to know where you stand, credit-wise, before applying for any loans. Fortunately, you can obtain a copy of your credit report from any of the three major vendors one time each year. You can also get your credit report free from annualcreditreport.com, which Federal law authorizes. You can receive more than one if you are willing to pay for subsequent copies. One good way to keep a running check of your credit report throughout the year is to get one copy from one of the three major organizations per quarter. That way, you never have to pay, and you have a good idea of your credit picture. So, what does your credit score say about your credit situation? For the average person, it does not say much. However, to lending organizations, it can reveal a lot. The information that is of particular interest to these groups include: The information in your credit report, combined with your credit score, helps lenders determine whether to extend credit to you.

What Affects Your Credit Score?

Credit scores can be affected by a wide range of everyday events, including some things that may surprise you. For instance, applying for credit can harm your credit score. It’s true! This is especially the case if you go and suddenly apply for many types of credit (credit cards, auto loans, mortgages, etc.) at the same time. Lenders would rather see fewer credit applications and long-term relationships with the creditors you do have. The things that affect your credit score most include: Solve these problems on your credit history to enjoy faster approvals, more approvals, and lower interest rates.

Key Takeaways

The Ins and Outs of Credit Scores

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Saving money and spending less may sound like the same thing, but they involve different financial habits to lead to financial security. Creating healthy spending habits and saving money can be difficult. With product placements, sales, subscriptions, and online shopping, buying is as easy as 1-2-3. But those steps can change, and you can begin making changes to bring yourself more financial security with the tips listed below to help you spend less and save more.

Creating Healthy Spending Habits

  1. Record your expenses. For a month, record all your expenses. At the end of the month, go back and see your spending habits. What surprises you? What is necessary, and what is unnecessary? Evaluate those spending decisions and decide if everything is warranted.
  2. Evaluate your income. Is your income enough to keep up with your spending habits? Take a look at what you bring in and determine if you need to spend less.
  3. Reviewing recurring expenses. Take a look at items such as insurance policies, mobile phone plans, cable service, etc. Can you make changes there to save some money?
  4. Determine your shopping stops ahead of time. Make a plan to shop only at specific stores. Limiting the number of stores you go to will limit the number of unnecessary purchases–saving you time and money!
  5. Shop with a shopping list. Create a shopping list–and stick with it! Get what is on your list to avoid purchasing the other items that catch your eye.

  6. Find patterns in your behavior. Look for trends. For instance:

    • Do you shop because of stress or boredom? If you are bored and shop, you may be making unnecessary purchases.
    • Are you rushing in the morning? If you don’t have time to slow down and eat, you may get the temptation to stop and grab food and coffee–which adds up daily!
    • Do you opt for free trials and forget to cancel? We all do this! You are excited to try a new service, and you forget to cancel it. Make sure that you make a note to cancel when you decide you no longer want the service. Try doing it at that moment to prevent charges if you forget later.
    • Do you routinely incur late fees? Late fees can add up. Create a calendar for when things are due to avoid paying late fees. Also, pay bills early if you can.
    • Are there services you do not use? There are so many cool things out there: subscription boxes, streaming, rental clothes–you name it! But are you using them all? Take a look at what you can do without, and you will begin making better “sign-up” choices.

  7. Create new habits. Everything we do is habitual. If spending is a problem, rework it for a solution. Here are some things that may help create new habits:

    • Drive a different way to work to avoid making specific purchases.
    • Carry only cash. You can’t spend what you don’t have.
    • Find free or low-cost events to attend. Once there, they usually guide you to others.

When and Where to Spend Less

There are many key areas you can focus on to spend less, including: Food Clothes Overall

How to Save

The best way to save money is to have it added for you! Check the interest rates at your financial institution and find the highest one. The more you put in there, the more you make off of it.

Takeaway

Changing your spending habits is not easy. It is a lifestyle change. Start with one thing you can change and work from there. Start with your audits and evaluate what changes you will make. From there, take baby steps. Over time, you will feel free and richer!

The Difference Between Spending Less and Saving Money

View Resource The Difference Between Spending Less and Saving Money
Tracking your expenses and spending is a great way to ensure you are not living beyond your means. No one wants to have their power cut off because they have to have that expensive handbag or coffee every morning. Below we will go over effective ways to categorize and track your expenses.

Needs, Wants, and Obligations

There is a significant difference between the things you need, your obligations, and things you want. You need things such as: You are obligated to: You may want: Before setting a budget or preparing to track expenses, you must first determine your specific needs, wants, and obligations, as these vary from person to person. Some of the things you need may include: You are obligated to pay things such as: Expenses that accumulate based on things you want may include:

Tracking Expenses

Tracking the amount of money you are bringing in versus the amount of money you are taking out each month can help you save a tremendous amount of money if that is your goal. Account statements: To start, look over all of your account statements, including all checking accounts, savings accounts, and any credit cards you may own. Determining where your money is going each month is the first, and perhaps most important, step to tracking your expenses. Create a budget: Budgeting is not for the faint of heart, and it entails hard work and dedication to succeed. Once you have successfully determined where you are spending your money each month, you can begin grouping things you need versus those you want. Determining necessities versus vanities will look a little different for each person; therefore, no two budgets will be the same. Begin your budget by allotting for things you need to survive and those financial obligations you have incurred. These may include items such as rent, mortgage, an auto loan note, both health and auto insurance, your electric and water bills, and groceries. It is essential to allot additional money within your necessities for those unexpected expenses, such as an emergency room visit. Once you have laid out your necessities within your budget, you can begin allotting for your vanities. Vanities may include things such as a meal out, a coffee from your local coffeehouse, hitting a night club, or a new handbag. Allow yourself a monthly personal spending limit within your budget, so you do not feel too restricted. Log your purchases: Whether it be a paper report that you fill out by hand or an online application, utilizing an expense report to log your purchases will help ensure you do not exceed your budgeted monthly amount. You can download many different apps straight to your phone for ease of tracking, or you can utilize things like spreadsheets or a simple notebook if you would rather the simplicity of monitoring. Identify necessary changes: After a month has passed of budgeting and expense tracking, you will begin to see your spending habits and be able to tell if your habits are healthy or not. Once you have determined areas where change may be necessary, you can easily make those adjustments in your spending to ensure a better financial future for yourself and your family.

Takeaway

Overall, categorizing and tracking your monthly expenses and spending will not only benefit you in the short term but the long term as well. Tracking expenses can seem quite daunting when you are first starting, but if you can stick with it, you will learn so much more about the things you need than those you may think you need. There are many ways to categorize your monthly necessities and even more ways to track your spending. Whether you choose to go old school and track things by hand, keep your receipts to enter expenses into a spreadsheet, or utilize an online application for convenient expense tracking, you are sure to save and cut down on your monthly payments by doing so.

Categorizing and Tracking Your Expenses

View Resource Categorizing and Tracking Your Expenses