How to Get Your Finances Beach Ready in 6 Easy Steps

 

Beach Ready Pinterest

The summer is almost here. It is likely you have looked at yourself in the mirror. You have probably said to yourself I have to get this body into shape and ready for the beach. Who doesn’t want to look good while they are walking on the beach or relaxing poolside.

So in order to get your body beach ready you have to put in some work to lose a few pound or firm up your body.

The same is true regarding your personal finances. When the summer is here we will only have six months remaining in the year.  While you are getting your body in beach shape why not work on getting your finances into shape as well.  To get your finances beach ready is similar to getting your body into beach shape.

Here are 6 easy steps to take now to firm up your finances so your body and finances are ready for the beach.

Identify what you want to improve

Just like you would look in the mirror to determine what area of your body you want to improve.  Do the exact same thing with your finances. Take a look at your finances and determine what area of your financial life you want to improve upon or look better.  Are you overweight because you are carrying to much debt or maybe you are a little skinny and need to build up your savings.  Which ever area needs improving the first to is to identify that area first.

Take your current measurements

Once you determine the area or areas you would like to improve you need to see where you currently stand.  For example, you want to lose 10 pounds how will you know you lost 10 pounds without measuring your current weight by standing on a scale.  These few measurements can help you determine where you stand currently.

Net Worth

Your financial net worth is simply your financial assets minus your financial liabilities. Knowing your net worth is an excellent way to measure your financial health. Calculating your net worth will help you track your financial progress from year to year or from month to month. When you calculate your net worth you want this number to be positive not negative.

Debt to Income

Debt to income measures the amount of income you earn versus the amount of debt you have outstanding. It’s another good indicator of your financial health.

You calculate it by totaling up all of your monthly debts then dividing it by your income. Using your net income is a more accurate calculation because it is the actual amount you take home which is available to service your debt.

Credit Score

Your credit score determines your credit worthiness which is based on your history of managing to payment of your bills in a timely manner.

Credit score can range from low 400s to mid 800s. Maintaining a good to high credit score has its financial benefits because you will usually receive better interest rate as well as financing terms when you are financing a purchase.

Saving Percentage

Having a healthy savings has significant benefits and is another indication of your financial health. Calculating your saving percentage is simply dividing your gross income by your savings amount. When calculating your total saving take into consideration the amount you saving for retirement, emergency fund and any other general savings.

By improving these numbers you will improve your finances.

What numbers do you want to achieve?

You have calculated your numbers to access where you currently stand.  Were the numbers better or worse than expected?  Improving just one of these numbers will help your finances.  Just like you want to lose 5 or 10 pounds, you want to improve your numbers so you can look financially better.  So set a goal to either increase your savings percentage, reduce your debt to income, increase your net worth or improve your credit score.

Get Financially Lean

One way to get your body to look great is to get lean.  You can apply this same concept to your personal finances.  By making your finances lean you will improve your financial situation.  Here are several ways you can make your finances lean:

Reduce the amount of debt you have outstanding

Reduce the number of credit cards you have open or carry in your wallet

Reduce the number investment accounts

Reduce the number of bank account you have open.  Try to use one bank if possible

Eliminate paper statements

All of these will help you improve your finances.

Reduce Calorie Intake

If you are looking to tone up or lose some weight you usually will reduce the amount of food you are eating as well as monitor what you are eating.  You can apply the same to your finances.  Consider reducing the amount of money you are spending as well as keep track of where you are spending money.  This will enable you to save more and see where you are spending your money to determine what can be eliminated.

Make Small Lifestyle Changes

Now you have make some changes to your finances don’t let all of your hard work go to waste. Why not make a few lifestyle changes to help you maintain this financial beach body all year long. So you ask what do I need change? Start with your financial habits. Identity your good financial habits and look to eliminate your bad financial habits. These small habits can have an impact on your financial life year round.

So now use these 6 simple steps to take action to get your finances in beach shape.  Start now so you are not looking back wondering where did my summer go.

Do it now.

It will not only help your finances to look good but will help you simplify your finances as well.

Til next time, take one step at a time to simplify.

Have You and Your Future Spouse Had the Money Talk Before Your Wedding Day?

Money Talk Before the Wedding

Have you and your future spouse had the money talk? I am not talking how you will pay for the wedding or honeymoon but discuss how you will you handle your finances as a married couple.

Since money is high on the list of topics that couples most often argue about as well as one of the issues that many times leads to divorce. It an important topic to discuss with your future spouse before your wedding day.

I know before your wedding day you are focused on making this day a perfect day. Remember your wedding day is only one day, but marriage is a life time commitment so you want to start on the right financial footing.

Prior to your wedding day you and your spouse should take some time to discuss how you will manage your finances. Doing this will avoid those arguments and its better to know upfront how things will be handled so you can make the appropriate changes as needed.

Here are 8 topics you and your future spouse must discuss before you say I do:

Discuss who will Manage the Finances

Being single you are probably managing your own finances. But once you are be married, you have a few decisions to make regarding your finances. Deciding who will manage the finances is an important one. You want to decide who will pay the monthly expenses or check that it was paid.

If neither is designated as who will do what you may assume the other has done it but neither of you have paid any of the expenses. This can result in late fees and overdraft charges. To avoid this decide who will be the designated CFO. Doing this before the wedding will lead to a good start of your financial marriage.

Discuss if you will have Joint or Separate Accounts

Prior to your wedding you probably have sole owner accounts. Once you are married you have to decide if you will keep separate accounts or open joint accounts. This can be a tough decision because you were accustom to keeping separate accounts prior to the wedding. I like to always simplify my finances.

Consolidating your finances as a couple as much as possible will help you simplify your finances. But this may not work for everyone. Discuss and decide what you and your spouse plan to consolidate to avoid future financial arguments.

If you decide not to consolidate decide how you will handle paying your bills. Who is responsible for what expenses Having your own money that you can spend however you want can lessen arguments about money. Come to an agreement so everyone is on the page and agree with the plan.

Discuss how Much Debt Each has Outstanding

Debt is a commonly brought into a marriage. It’s likely one of you will have either credit card debt, student loan debt, car loan debt or mortgage debt which will be brought into the marriage. Having a discussion about the amount of debt each of you will bring to the marriage is an important conversation to have with your future spouse.

You want to be honest with your future spouse about your debt situation before the wedding. Not being honest about your debt situation is not a good way to start your marriage. If there is significant debt outstanding decide together how you’ll move forward with eliminating this debt.

While you are discussing your debt here are some questions you want to ask each other:

How many credit cards do each of you have?
• Do you have student loans?
• What other debts are outstanding?
• What are the balances?
• Are the payments current?
• What is time frame to pay off outstanding debts?

Having this discussion requires complete openness so don’t hide debts from each other. You can’t hide money from each other.

Discuss your Financial Priorities and Goals

Before your wedding day take the time to discuss your short term as well as long-term financial goals. It’s important to listen to each other’s goals. That way you can work together to create a list of your most important goals both of you want to achieve.

Once you have discussed your goals you can then set your financial priorities as a couple. Setting financial priorities as a couple doesn’t necessarily mean that you both share the exact same goals, it just means that each person is aware of each others financial priorities.

As a couple each spouse can have individual goals and you can also set financial priorities as a couple.

Discuss your Budget

One way to help you achieve the financial priorities is to take the time to establish budget as a couple. It is important that young couples budget together and not just for the weekly groceries. To do this you must understand your monthly income and expenses as a couple. Once you understand how much the combined income is then you can accurately calculate a plan to save money or eliminate outstanding debts.

Using an online budgeting software or an online budgeting site can be a helpful tool to track your monthly income and your expenses.

Discuss Your Savings Plans

Saving is an important part of your financial future together. It maybe a little challenging if both of you have different saving styles as well as savings goals. Now is a good time to discuss your savings goal with each other so you can make better saving decisions as a couple.

You should discuss the following regarding your savings:

• What are your savings goals?
• How will you save each month?
• What are you saving for?

Establishing your savings plans now will make it easier for the two of you to work toward reaching the goals you want to achieve.

Discuss long term plans?

You are about to get married you are probably not thinking about what would happen if one of you passes away or became incapacitated.  But as a married couple its something you need to discuss.  It’s better to have a plan in place when something does happen.

You and your future spouse should consider drafting a will and purchasing life insurance.  In addition to having a will and life insurance in place, make sure each of you update your beneficiary designation on your accounts to reflect your future spouse. This will ensure that your assets are distributed to the appropriate person.

Discuss on Regular Basis

Having the conversation about the above mentions topics is important before your wedding. But having ongoing regular discussions about your finances is crucial to a financially happy marriage. So make sure the financial conservation continues even after the wedding vows.

Your wedding day is the celebration before building a future with the one you love. It’s important that you and your future spouse have the financial talk prior to your wedding day to make sure both of you are on the same page when it comes to your financial future.

What are some other financial discussions you wish you and your spouse had before your wedding day?

Til next week, take one step at a time in order to simplify your finances.

 

Simple Inspiration Interview featuring Barry Choi

Barry ChoiThis week’s Simple Inspiration Interview features Barry Choi from Money We Have.  Barry is a personal finance and budget expert.  He provides practical money saving tips to help you take that dream vacation.  He also works at a Toronto TV Newsroom where he provides personal finance and travel tips.  Barry bio

Let hear how Barry has simplified his finances

What event lead you to simplify your finances and your life?

I started take things really seriously after I found out that my advisor had put me in questionable mutual funds that had high MERs and DSCs. This is when I realized I need to simplify things by learning to take control of my own finances.

What area of your financial life needed the most simplification?

After becoming a do-it-yourself investor I got a bit carried away and started investing in a few things I knew nothing about. After recognizing this problem I simplified my portfolio by selling off assets that didn’t fit my investing profile.

Where did you begin to simplify your financial life?

Cutting expenses and just spending less was where I really began to simplify things. By saving more I was able to increase my overall savings rate.

What was your biggest challenge or roadblock when it came simplifying?

Selling assets at a loss was a big challenge at the start. I would try to wait for things to break even before selling. This of course didn’t always happen but more importantly I didn’t factor in opportunity costs.

What app or tool helped you the most when it came to simplifying?

Plain old excel was the biggest difference maker since I was able to manipulate the numbers when I created a budget.

How has simplifying changed your life?

As an index investor I spend next to no time looking at my portfolio which has given me more time to spend doing the things I enjoy like blogging.

Are there any areas of your finances that you still need to simplify?

I’m pretty comfortable with where my finances are right now, but I would definitely like to learn more about taxes. I don’t think there will ever be a way to simplify that though.

What advice or tips would you give to others who want to simplify their finances?

Read a book. Honestly there’s so many great resources out there and if you read just one book, you’d probably know more about personal finance than 80% of the population.

What book, blog, or podcast would you suggest to someone who is looking to simplify or improve their finances?

For Canadians, my two go to people for anything personal finance related are Preet Banerjee and Gail Vaz-Oxlade. Both of them make personal finance easy to understand and they strive to help people learn about their money. Of course you could also check out my blog at Moneywehave.com

Do you have an emergency fund established, if so how did you determine the amount needed to fund it?

Yes I have an emergency fund of roughly $11,000. I came up with this number because between my wife and I; we have 3 bank accounts and that’s the combined total we need to avoid monthly fees.

How long did it take you to simplify?

Not long at all, it’s really simple once you’ve made it a goal.

What’s your best savings tip?

I have 3 savings rules I live by. 1) Spend less than you make 2) Pay yourself first 3) If someone offers you free money, take it! (pension plans, government grants)

What are your current financial goals?

I’d like to increase my income a bit this year by picking up some more freelance work.

Any other thoughts you would like to share with others who are looking to simplify?

Don’t wait, start now. There’s absolutely no reason why you should delay getting your finances in order.

Thanks Barry.  I appreciate you taking your time to sharing your thoughts on how you have simplified your finances.  If you would like to read more about Barry and receive some of his traveling and personal finance advice visit his blog Money We Have or follow him on Twitter @barrychoi

To read previous interviews in the series click Simple Inspiration Interviews.

If you are interested in sharing how you have simplified your financial life, send me an email and I will follow up with you.  Enjoy the rest of your week. Til next time, take one step at a time to simplify.

One Simple Step to Simplify Your Finances – Spending

SpendingIn last week’s edition of One Simple Step to Simplify Your Finances mini-series I discussed how having an emergency fund will help you simplify.

Hope you have taken action to fund your emergency fund or if you already had one in place you made sure it was adequately funded.

Now it’s time for another simple step to help you simplify your finances.

As you know there are many things we cannot control when it comes to our finances. For example we cannot control the direction of the stock market, we cannot control interest rates, we cannot control fees, and we can not control those unexpected expenses (the reason you have established a emergency fund). Those are a few things that are just out of our control. That is why I always suggest focusing on those things that you can control.

One of those things that you can control that can have a positive or negative impact on your personal finances is your …..

 

Spending

 

You have probably heard the term spend less than you earn. If you want to grow your wealth and simplify your finances you must be able to control your spending. Its one thing you actually have control over and will have a significant impact on your financial situation.

You hear this often but many people are unable to get a handle on their spending.

How can I begin to spend less?

Its not always as easy as it sounds.

How to Control Your Spending:

Create a budget

You may not like to budget because it takes too much time or makes you feel restricted. I can tell you this if you don’t know how much is coming in and going out each month you will not be able to simplify your finances.

A budget is basically an anticipation of your monthly income and expenses. Here are several reasons why you must create a budget as soon as possible to make you financial life easier and help get your spending under control.

Know where your money is being spent
A personal financial budget allows you to know where the inflows and outflows of your money come from. It puts you in control of your finances instead of letting your finances control you.

Helps you achieve your financial goals
A budget is your road map to help you achieve your financial goals.

Helps you determine your priorities
Creating a budget allows you to see where your money goes as well as lets you know what your real priorities are. For example, you may say you want to save more for retirement however instead of saving this money for retirement you are spending it on other things.

Know your Financial Habits

Think about your financial habits. The good ones you have developed as well as the bad ones you may have. In order to simplify you have to develop good financial habits and eliminate the bad ones. Yes, I know it is easier said than done. Trust me I know. We all have some bad habits that can be a challenge to eliminate. So take some time to identify your financial habits – the good and the bad. Identifying your financial habits will help you on your journey to control your spending as well as help you to simplify.

If you are serious about establishing a simplified financial lifestyle make sure you know where you money is spent on a monthly basis.

Benefits of Controlling your Spending

More to save.

If you are not spending your money that means you will have more money to save. Saving enables you to have more to allocate to your emergency fund as well as your retirement. Having both of these in place will provide you with an financial peace of mind when those unexpected expenses occur as well as when it’s time for you to retire.

Less stress

Spending less enables you to save more which leads to reduced stress. You have less stress because you know your emergencies are covered, your retirement is being planned and money is set aside for those future purchases. You will sleep better, your overall financial and physical health will improve.

Helps Eliminate your debts.

Maintain control of your spending frees up money which you can use to reduce your debts. Also if you are spending more than you earn you are probably using credit card to make those purchases which increases your debt.

So take some time to review your monthly spending. You maybe surprised how much you are spending and may discover a few ways to reduce it.

It is one of the things you actually can control so manage it properly. Less spending means more saving which will lead to financial peace of mind.

So stop spending and start saving.

Now you must take action by reviewing your spending. Look for ways to reduce your spending.

  Are you ready to begin simplifying now?

If so, sign up for my newsletter and you will receive a weekly email to help you simplify as well as receive a free eBook which provides you 9 simple steps so you can simplify your finances with in 30 days. Sign up now by entering your name and email address below.

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Til next week take one step at a time.

Next week I will provide another simple tip for you to implement.  So stay tune and sign up for newsletter so you don’t miss any of these tips.