What is & quot; Compound Interest & quot; Media?

Definition:

Albert Einstein supposedly described compound interest as "the most powerful force in the universe." What is compound interest and how it can help grow your investments, retirement, or to become a millionaire?

Compound interest refers to the interest that generated the principal and interest.

"What?" Do not worry if it sounds like gibberish. Just stick with me for a second.

Suppose you deposit $ 100 in an investment account for retirement. The interest is payable at a rate of 10 percent per year. At the end of Year 1, you have $ 110.

You start the year 2 of $ 110 on your investment account $ - $ 100 principal, and $ 10 in interest. You have the full $ 110, main and end of year 2 interest invested throughout the year 2, your investment increases by another $ 11 for a total of $ 121.

Note that in a year you earned $ 10 interest, because the only money I had was the main thing. But in year 2 you earned $ 11 in interest, because you were the principal plus the interest for the first year. In other words, an additional $ 1 compound interest on interest.

You begin the year with $ 3,121 in your investment account. You earn 10 percent or $ 12.10. At the end of the year you have $ 133.10.

Notice how your payment has increased by 10 percent - $ 10 the first year, $ 11 the second year, $ 12.10 in the third year. That is because the decline in interest on previous interest.

The fourth year, your payment will observe 10 percent of the $ 13.31 (10 percent of $ 133.10, which means it will end the year with $ 146.41. Sure that you have won this time 46 dollars on your original investment of $ 100 is not bad!

What if you had not plowed his statements? In year 1, a yield of 10 percent is obtained. Keep the main thing, the original $ 100 invested, but you spend the extra $ 10 early in the second year, you have only $ 100 invested.

Do this every year - the original investment of $ 100, but the extra $ 10 at the end of the year 4, only $ 40, not $ 46.41 because it has not left the compound of interest.

"Big deal", you might think. "$ 6 is not much money."

True. But imagine $ 10,000. At an interest rate of 10 percent compound at the end of your initial investment fourth year you will win $ 4,600 and $ 6 is now $ 600.

Better yet, imagine doing this with $ 100,000 would be. In a mixing ratio of 10 percent, you win $ 46,000!

Of course, most of the investments do not give constant returns of 10 percent - take this number only a simple example. Legend Warren Buffett predicted invested, that the stock market will give you a 7 percent yield to early and mid-21st century to learn to read this article as the yield effects, how long does it take for your money to double.

Also known as: compound interest, compound return, compounding annual growth rate

Examples:

You invest $ 50 interest rate of 10 percent. After a year you have $ 5, for a total of $ 55 in the second year, interest on your initial investment of $ 50 you earn (the "principal"), plus an additional $ 5 you won interest rate during the first year.

In other words, you earn $ 55 to 10 per cent, or $ 5.50, for a total of $ 60.50.

The "compound interest" is that the extra 50 cents, which is the interest that you have earned interest.

The compound of interest from more, your earnings will be even more dramatic (because the interest will).

More tuition: the cost of college

Many families find it difficult to estimate the cost of college, especially for the first child that goes to higher education. Application, of course, is the big-ticket items. But what other family expenses can I expect? How much budget should be for college? And what are the ways that you are reducing costs?

Housing

About tuition, find a place to live is the most expensive a burden on the budget of the University. Although some people forego these costs, living at home with their parents during the college years, most people have to find a place to live, it is because their parents live too far from school or because they want to learn to adulthood is and independence away from home.

Student residences are more expensive than the neighboring apartments in the rule, partly because dormitories are at a certain level and partly because college dorms are usually expensive diet. Some colleges, you can do without this food; not others.

Every college has a "standard" separated government for many years most students live on campus. Many colleges require freshmen to live on campus unless they have family at a distance from the campus. Some universities require students to live all four years on campus, while others encourage students to move beyond the first year off campus.

Students, which can reduce the cost of housing, sharing an apartment or house with roommates and off campus. Lives alone, is the most expensive option, since the overhead is larger: support a single tenant, the cost of a kitchen, living room, roof and utilities. If you live with a roommate, the additional costs for the common areas, the bill higher current is cut in half. Cost adding a third or fourth roommate other chops.

Transport

. Some college towns like Boulder, Colorado, are pedestrian: it is easy to walk, bike or take the bus, where you should go. But other schools, Metropolitan State College of Denver and the University of Cincinnati, are not consistent in pedestrian zones. The students will have difficulty navigating the area, without having a car, and most of the jobs and internships will be located in areas that need the student to arrive.

The cost of a car - both purchase, fuel and maintenance - is the second largest budget buster years of college.

The Voyage of the students at home during the holidays, such as Thanksgiving and Christmas, you can also add up to hundreds of dollars, especially if these trips require extensive travel or flights.

More information on the budget for a car and discover how to avoid car loans, so a car payment for you.

Technology

Students must be at the forefront of technology: at least, they will need a cell phone or a smartphone and a laptop. If you study certain subjects or graphics programming, such as film, art and multimedia design, is almost certainly need an apple, which is more expensive than a PC.

Students can save money by not getting a printer to save; Most universities have computer labs that provide the pressure. Some can print for free the students, while others have a small fee.

Students can also save money by. Either a laptop or desktop computer through a tablet In general, there is no reason all three.

Furniture

Everyone thinks about the cost of rent, but many forget the cost for all the items that go in your home: kitchen towels, sponges, dishwashing liquid, forks, can openers, sheets, pillows, blankets, towels, clothes hanger in wardrobe, file folders, office . They are worldly, small objects necessary for modern life, while each item is individually cheap, this can add up quickly.

Browse thrift stores and to find as much as possible products used Craigslist. Give up things that are not necessary: no need to frame for a bed to buy, for example, if they are easily a mattress on the floor. And to be creative: when I was in college, I used a lot of empty milk crates on top of each to my bookshelf.

How budget for a car if you & # 039; Again teenager

Even in adulthood - can buy a car a difficult thing to balance. But if you are a teenager, it is even more difficult.

They work a minimum wage job - part time while you are in school - and you know that a car costing thousands (plus insurance, gas and other car expenses). How can you budget for such a large expense?

Here are some tips:

Create a budget

First things first: you will never withdraw able to keep their savings for a car (or anything else in life), if you have a budget in place. Keeping track of your income and expenses can seem a little boring, but you know exactly where your money is going each month, especially now, when you have not much of it.

Set a spreadsheet program or budget allows you to record the amount of money you make and where it goes. (Some applications do this automatically for you if your credit card and bank details.) Account for all by the candy bars 99 cents, which led to the grocery store.

Then configure the games, how much you spend per month for each zone. Large areas should be included, food, entertainment and of course your car. (More information on the amount set aside for a moment.) Now you see where it goes, you can keep your spending on track and provide measures to ensure that their goals meet categories.

Thoughts economical

As frugal is a habit that is to serve you well for the rest of your life, and save for a car is a good reason to start.

Another look at the budget that you have created, and try ways to reduce further. Instead of going to the mall or to the movies every weekend, you can less expensive ways to have fun, as can be found with friends for a movie night or position of a local park or on the beach regularly. When you meet for coffee, whipped cream imagination creating $ 4 each time to get you, or could do with a coffee at home and still have the same conversation with your friends?

You do not have much money coming in that time to do so, what you put as much as possible.

Buy Used

Besides the fact that the new cars are much more expensive, it may be difficult to finance a new car as a teenager, unless their parents sign for them together. (This is an option, but you're still paying more each month if you buy used.)

You are much better off in cash for a car. And that means that you have a used car ... probably buy a very used car.

Note that many people have stories less-than imagination "first car", and there's a reason for that. In this phase of your life, you do not really need a lot of options, such as a large sound system, leather seats and a rearview camera. You just need something safe and reliable that you get from point A to point B.

Browse the classified ads or search Craigslist to get an idea of how much car costs also used safely get (good condition 16 Camry with 170,000 miles is only $ 1500 by Kelley Blue Book) still works. Plan to save for this goal.

You're friends do not care that your "new" car has some miles on the clock, you had just won impressed that you have your own set of wheels.

In search of more lucrative work

One last tip: It is not necessary to take a minimum wage job, even if you are still a teenager. You can make your job at minimum wage as a backup to keep stable source of regular income. But in his spare time, looking for better paying gigs.

Some ideas:

• Tutors students in middle school math, science, English or a foreign language
• Keep children - many parents pay more than the minimum wage, especially if you take care of more children
• Mowing the lawn, leaves, shoveling snow
• Learn some carpentry or repair of basic skills and a job with a construction crew

Just because you is not a teenager, you have to earn only $ 7 or $ 8 per hour. If you want to increase your income by 12 - $ 15 an hour and save you more than you deserve, you will be on the right way to pay for a car in the shortest possible time.

10 ideas for inexpensive gifts for the holidays

Need ideas for inexpensive gifts? Here are 10 frugal gifts you can give this holiday season.

# 1: A framed photo - In this age of digital photography, it is rare that a color photo to see. A good impression of an image that is a good memory. This inexpensive gift is full of meaning. For a simple but polished presentation protect the photo in a simple black frame - it does not have to be expensive.

# 2: An ornament - What better way to create Christmas memories that give someone an ornament for your tree? Bonus points if you make the ornament. Read on to make more homemade gifts.

# 3: a potted plant - the bare branches of the trees drilled in the winter? Add a little green to life your gift recipients with a potted plant indoors. You can find many indoor plants to obtain robust soft light in the mass retailers such as Target or Wal-Mart or hardware stores like Home Depot or Lowes. More information about the collection of houseplants.

If you have a little more money to spend, you can in a crock pot, one of the least expensive pots "beautiful appearance" (is a cut above container made of black plastic, are sold in the plant to make.)

# 4: A book - If you know, pull the tastes and interests of your gift recipient, consider a book that is sure that you will love. If you do not mind a used book, you can find online related businesses. When an e-reader, you can buy maybe two or three books for the price of a paperback.

# 5: A Compilation Playlist - 10-15 Consider downloading your favorite songs from the gift recipient, to unite them in a playlist, and you give your friend as a "mix CD" or "MP3 mixing List".

# 6: A toy for Fido or Fluffy - Many pet owners identify strongly with their dogs and cats. If you, Fido and Fluffy know someone who firmly convinced, consider buying a toy for the animal.

# 7: Great Fragrances - Scented candles, soaps and bath oils - or "premium" also detergent - create a sense of luxury to the everyday life of a person, without costing much money. You can get a nice scented candle or lotion for less than $ 10.

# 8: a grab bag of little luxuries - Speaking of small notes luxury, why not mount goodie bag full of "little things" that the recipient likes? Remember, a gift bag with a bar of your favorite candy gift, favorite nail polish or warm socks winter favorite to fill receiver.

A friend of mine complained about his collapse sandwiches to eat on the way, so I gave him a gift bag that includes a number of toothpicks in bright colors. (The bag also includes a candy bar Butterfinger and a set of nail clippers, I knew he needed.) Total cost about $ 5, and the gifts were significant, because they remember their weaknesses, and be sure to show your cross.

# 9: fuzzy slippers - your feet are cold in winter, especially when walking on wooden floors or tiles. A pair of fuzzy slippers is the ultimate everyday luxury.

# 10: Gift card - The trick to as a "gift card" to the excitement is comprised of a "gift" in order to treat a map for the type of business that is not the recipient, usually to buy. You buy something at a gas station or store less mass than "commercial", so you might want to stay away from gift cards that people councils, vitamins and minerals happen in Q water.

But buying a T-shirt into a good business, go for a nice dinner or enjoy a manicure is considered a luxury, not a race. Try to select one card at a restaurant or spa / local present.

Before you buy:

Know your limits: how much money you can spend on holiday gifts? Use this worksheet to help you budget for spending time.

The Bottom Line:

There are many inexpensive gifts you give during the holidays. Be creative and remember that a personalized gift is more valuable than an expensive gift shiny.

Most millionaires budget

Guess what self-made millionaires in America have in common?

Most of them are budgets.

One of the first books I had to read personal finance The Millionaire Next Door. The authors Thomas Stanley and William Danko, are teachers who have dedicated their careers after studying the habits of self-made millionaires - defined as people who were millionaires, without the help of an inheritance.

Stanley and Danko found several similarities of millionaires, including shared:

• Millionaires live frugally.
• They drive cars.
• You buy (used) car instead of renting one.
• They live in the "house less" than they can afford, especially if they grow their wealth. Most of their neighbors are not millionaires.
• More than half never received even $ 1 as inheritance.
• Nearly half never received money for tuition their families.
• Nine of the 10 millionaires who have never received a dollar of property in a family business.
• Self-made millionaires are frugal husband. The authors say that a particularly compelling about a man considering his legacy, was his wife, that she officially millionaires history. The woman nods and returns to clip coupons.
• The millionaires own their own business. Some have a full-time secondary and companies, while other companies have full-time. (More information on the company can start on the page.) "The self-employed are less than 20 percent of the workers in America but do two thirds of the millionaires," says the book.
• They tend to have boring unglamorous business "," - the kind that would not make an interesting conversation, cocktail. The book says: "We are welding contractors, auctioneers, rice farmers, owners of Holiday Park, pest controllers, coin and stamp dealers, and paving contractors."
• The only area where they spend money, generously to the education of their children.

And of course, my favorite position:

Most of the budget of self-made millionaires and tracking every penny. You know how much they spend on food, gas, household and every other row by row.

The authors say:

"Planning and control of consumption are important factors underlying the accumulation of wealth ... The use of a house without a budget is similar to operating a business without a plan, without direction and without direction."

Read more: Why should rich household, too.

What, why and how

Millonarios start with a "big picture" goal. Imagine how they expect to save themselves, to invest and build assets. Represent these main objectives, "which means" to reach them and "why" they want to achieve.

Tracking budgets and expenditures are millionaires "like." Check to see your output stream, whether the expenditure aligned with the objectives of large images.

Clip coupons, use cheap clothes and drink beer domestic. Or as academic authors said: "They often live in environments possess relative rarity."

You make budgets, tracking your money, and to understand how they cut costs so that they can invest more.

If this is not motivation to do a budget, do not know what is.

(Want to start your budget? Use these sheets to keep track of your spending.)

How should I take my child to school?

You have the horror stories: Joe the student graduates $ 50,000 in debt. He can not find a job, and then had to tables in a restaurant while. $ 400 monthly payments on their student loans

Sally leaves the student's University of the State of $ 60,000 debt. You also can not find a job and file bankruptcy - only to find that student loans can not be discharged in bankruptcy. These horror stories are afraid for the future of their own children. What can be done?

Step one: Relax.

The horror stories you hear on TV are the stories of outliers. One third of the graduates of universities and colleges four years (, for which complete data last year year) without student debt at all, according to statistics in 2008, the project on student debt, a cited non-profit organization.

The remaining 67 percent of seniors who carry a debt load complete average debt of $ 23,200. It's very, very of $ 50,000 + horror stories you hear on the news.

And do not forget: student loans are usually loans at low interest rates are the interest is tax deductible. This is one of the best structures of the loan you can expect to receive.

Second step: evaluation.

Before sending high school to college, take a moment to when thinking about what will be your earning his degree.

The college graduate earns on average $ 1 million more than a non-college graduate over the duration of his life, but the data is so large it is probably useless. Connects electrical engineering students in the same class as the majors in sociology. She graduated from Harvard as other graduates will be mixed in the same category.

It is important to ask how much money you depending on your age and your choice of college earn less. In the next two sections we will look at both.

What is your age?

The middle class of 2009 college with a degree in mechanical engineering earned a base salary of $ 53.400, according to Forbes magazine.

It is spacious enough data - there is definitely a difference between, for example, civil engineers and biomedical engineers -., But at this stage it is difficult to predict which branch of the great junior engineer, which makes it easy to predict that you will join wants the Faculty of Engineering.

Especially something technical matic or strong - - if your child to specialize in something else will weigh this potential child will be starting salary. College graduates work in management salaries Retail is $ 27,900 start, reports Forbes.

What college choice?

The reputation of a college or university, especially heavy on the probability that a student find a job in your field and your starting salary. A graduate of Florida State University received an average starting salary of $ 38,500, according to the FSU site, while he was a student at the University of Illinois at Urbana - Champaign is an average starting salary of $ 51,500 profit.

Remember the Forbes list of the data students get starting salaries of $ 53,400? It is a great national average. $ 14,000 - a graduate of a school like MIT guide to get a starting salary of $ 67,270 a student.

How much should I borrow?

Consider the rule "starting salary" applies: borrow more than your expected starting salary.

Under this rule, you can justify a loan of up to $ 67,270 when your child goes in the School of Engineering at MIT when youth who are considering a degree in Humanities at Florida State, though, you should limit the loans in the amount of $ 38,500.

There is only one rule, not a rigid law. The rationale behind this concept is that the graduates of their student loans in 10 years, when applied to pay 10 percent of the gross starting salary for the loan.

Over time, the student will probably get better wages, they can accelerate the repayment of their student loans. But the new editions such as weddings and babies may require most of its increase.

Visit your child's school? Learning to travel without spending a fortune.

401k Contribution Limits in 2014

What are the new frontiers for 401k pension contributions in 2014?

The contribution 401k retirement age tend to change frequently, as it is adjusted annually to keep pace with inflation.

In 2014, however, there are no contribution limits 401k change. The 49 and under make up to $ 17,500 in their retirement plans 401k or 403b.

People over age 50 can contribute an additional $ 5,500 per year over this amount, a total contribution limit of $ 23,000.

IRA contribution limits remain unchanged, too. In 2014, the authorized persons can contribute $ 5,500 to a traditional or Roth IRA. If you are 50 years or older, you can contribute an additional $ 1,000, for a total of $ 6,500.

Between 401k and IRA contribution limits are met, the taxpayer can save 49 to $ 23,000 in 2014, and can save 50 years older taxpayers $ 29,500 for retirement. Not so bad!

Remember: you are free to save more money - as much as you want - in retirement when the money held in a savings account, CD, tips, and taxable brokerage account. You will not get the tax benefits in these economies over the limits indicated above.

If you own your home and quot; Free and Open & quot;?

It was not so long ago that one of the best performances of their own homes was home equity lines of credit could be obtained. In practice, this means a lot of fun for many people; new furniture and electronics, a pool, maybe even a new car or exotic vacation. And then ... POP!

As the real estate market crashed hear how many people are in their homes under water. But now, suggests statistics and anecdotal evidence also that more and more Americans for a completely different approach for the property, that have their own home strive search "free and clear."

Like any other financial decision is very personal and depends on the situation. But overall, if you are free and clear sounds your home as a financial strategy that could fit your own plans for large images have to, you must first weigh some pros and cons of the base.

Topping the list for most people in the category "Pro" is peace of mind. Plain and simple, it is not to have to take care of a mortgage payment, and to know that you are getting a roof over your head, if, for example, loses his job. For many people know that they do not pay their hard earned money in the bank at interest money is also a plus. But dropping a large mortgage payment also gives you greater financial flexibility to do other things. Take other ways that might leave work when the mood so moves you.

Disadvantages of tax cuts, such as the loan mortgage interest deduction is missing (the higher your tax bracket, the tax cut of any kind). And with interest rates at historically low rates, no one can say that when you self-discipline, time and know-how to spend money instead of paying a low interest rate loan might make sense to invest. But let's be honest, very few people have that kind of discipline, time and experience.

Finally, if you have a single penny free and clear of investing, you may be better off to be investing in several other places, in order to diversify and keep some cash on hand for emergencies. Your bank will not give you the money if you're in a bind!

The conclusion is that more and more people decide that the benefits outweigh the disadvantages. Studies show that almost 30% of Americans own their home free and clear. That's 20.6 million homes!

Can I afford my house?

Several factors predict who will or will not choose to be freely and clearly stated. First, the value of houses. Has a direct correlation between the way the houses are affordable in a given area, and to preserve the ability of people to pay for their free and clear mortgage. For example, one of the highest rates of free and clear property rights in the country - about 50% - is in McAllen and Hidalgo, Texas, is located where the average house value is $ 75,000. Contrast, the. According to Washington DC, for example, where the value of the average home is about $ 400,000, and only 8% of the homeowners are able to pay their mortgage

A second important factor that we see, Cuyo is the age of the borrower people. 65-85 age group in the list to be paid to be able to get your mortgage. Almost 40% of the owners of this group have free and clear. The reasons for this are the fact that the longer you live somewhere, the more time you to pay the mortgage, and the elderly has historically saved money for a down payment and pay their mortgages. Free and very clean is also a priority for these people as they approach retirement, but increasingly we see younger property of the people, free and transparent.

The latter is the credit score Nearly 45% of all people who have free and clear, a credit score in the range of 800 to 900 of this particular factor have can with the question. "What comes first, which are equated chicken or the egg ? "People with self-discipline to have probably self-discipline, paid to your mortgage a stellar credit rating. And people who manage to get your mortgage paid wind usually a higher credit score. The point is, it's good to be one of them!

If your goal is to be free and clear owner, any additional amount of money lying around that you can use to pay their mortgage bills. Also, if you make one extra payment per year, you can set the time it takes to pay significantly reduce your mortgage. Discover one of the online mortgage calculator to see how quickly the dollar could melt. Another way to do the same if your bank allows it, half of your mortgage to pay every two weeks. If you have not refinanced to take advantage of low prices, what are you waiting for? And if you apply for a mortgage instead of this 30-year mortgages, which we survive 15 seriously the holding of free elections and clear, then seriously!

Finally, check to obtain the expenditure of private households for other cost savings that can be used to mortgage are paid! For example, your property taxes reduced or to save money on insurance or utilities owner? These savings can be used to pay your mortgage.

Shari Olefson wrote the book FINANCIAL FRESH START: Your five-step plan to adapt and thrive in the new economy.

2 questions that will change your spending habits

Make the most of your money means limited mapping, how you spend your money more. In fact, the heart of the budget has almost nothing to do with the numbers.

Budget requires you to take a long hard look at your life. The way you should spend your money reflect your deepest values.

Budget, the core is the act of aligning your spending with your values.

Approve a budget requires more than filling out a worksheet. We have to set priorities.

To do this, you will need to ask some tough questions.

For more information about pursuing your goals much savings.

Question 1: What are the chances that I miss the way you spend money?

Suppose you really want to have another child, but you and your husband worried that you can not afford to have another child to be raised up. Or take've always wanted to visit her grandmother in France, Chile, or his parents, but worry about the cost of the ticket.

Anyway, I think it is something that "love" to do - a great opportunity - you think you can not afford.

Are there important areas of your life where money is leaking? Can you cancel your cable TV service, reduce the size of a car-sharing and start with second-hand clothes?

Can you install a shower of 1.5 liters per minute in your bathroom, so you can shave $ 10 - on the water bill $ 20 discount per month? Can you give cigarettes or drink alcohol?

These little ornaments budget may not seem like much - $ 30 a month here, $ 60 a month - but you can add up to hundreds per month.

If you make small adjustments and cut their consumption habits so that you can save an additional $ 300 per month, you have 3 $ 600 per year. This is your money "big dreams", a nice chunk of change.

Learn more about money "fun" more budget.

Question 2: What is my current expenditure say about me?

If you have not after your money, but is one of the best ways to see your running costs to take inventory of your belongings. Here are some points to consider:

Clothes - How many shirts, pants, dresses and shoes are stacked in the closet? They have a huge collection of clothes? How often do most of these clothes?

Try to mentally together the value of everything in your wardrobe. How did it cost anything? How do you think spent on clothing and footwear in recent years?

Your house or apartment - Which part of your total compensation not your house or apartment can cost you? It's easy to make a rough estimate of this. If your rent is $ 800 per month, and you take home $ 2,400 per month after taxes, you spend a third of each paycheck on rent.

With a beautiful home one third of your time worth? Align with your values? If the answer is yes, that's fine. But if your answer is no, you try to find a better place to live. Renting an apartment is $ 600 instead of $ 800, so is only a quarter of his salary to his house, instead of a third of it is spent. It's like you an increase of 8 percent.

The calculation of the amount of your paycheck that you spend on the case is a little more difficult when you own your home, because there are a lot of "accessories" fresh you need to consider. In addition to the mortgage, pay for insurance, property taxes, repairs, maintenance, tools and services. Use a budget worksheet, how to see a lot of each working day of 8 hours in the maintenance of spent at home.

Restaurants - dine on special occasions, or they eat several times a week? If you eat often, you fall into one of two camps: o're avid food enthusiasts, the "food" has a legitimate hobby or your money for something that is not important to you. What is it?

Learn more about the saving of restaurants and entertainment.

The Bottom Line

The secret of the high budget is not caught in dollars and cents. The key is to align your values, your dreams and desires with your purchase behavior.

Complete a worksheet that shows where your money is an important first step, but it is only effective when combined with an honest assessment of how you want to spend your life.

Over 40? 7 ways to start your retirement ...

After the opening of the 40th birthday cards, you realize that you can learn about retirement. She bought a book or a magazine retirement, he said that - oops! - You should have started saving for retirement in their twenties.

Oh, damn. You do not have to start saving for early retirement. What now?

Here are some tips to guide you through retirement, if you are late to the game.

# 1: catch up

Assuming you with $ 0 are 40 years old retirement. At your age, you are legally entitled to save $ 17,000 per year in a 401k retirement plans. How far does the money down?

(Read this article for their contribution to the pension limits.)

Assuming a yield of 7 percent - is not accidental, as the legend of the investments Warren Buffett says that we see in the coming decades annualized return - your 401k increase to $ 1 million and 24 years and 2 months. This means that you on the right path to $ 1 million age 64, in time for retirement.

They are another 7 years for 1 million need inflation-adjusted $, which corresponds in today's dollars. In other words, you will inflation-adjusted $ 1 million age 71, provided you hold a contribution of $ 17,000 per year. Since many retirees work until the age of 68 or 70 years would be an achievable goal to work for seven years.

# 2: Understand how much you need

"But I do not need a million!" You would think ,. "I just want a simple life."

Ah, but a simple life requires $ 1,000,000 in the bank. You see, most experts agree that when you retire, you have to remove more than 4.3 percent of the bond portfolio every year. (They are called the "4 percent rule" and the well-known "rule of 3 percent." - Read two articles for details)

Three percent of $ 1,000,000 is $ 30,000. Four percent to $ 1 million is $ 40,000. In other words, if you want to live with an income of $ 30,000 - $ 40,000 a year in retirement, a portfolio of $ 1 million at least.

(This assumes that you do not have a pension, houses for rent, or other sources of retirement income. Closes the social security, many people find that to be thinner than they expect.)

# 3: to take more risks, not

Some people make the mistake, the risk of additional investment for the lost time. The potential benefits of: 7 percent, there is the possibility that your investments can grow 10 percent or 12 percent.

The risk is the risk of loss is much greater. Your risk should always, always aligned with their age. People in their twenties can accept greater losses because they have more time to recover. People in their forties can not.

In purchase does not take additional risk. Select one of the recommendations of proven asset allocation and true following:

• 120 minus age in stock funds and the rest in fixed income funds. (Highest level of acceptable risk.)
• 110 minus age in stock funds and the rest in fixed income funds. (Moderate risk level.)
• Your age in pension funds, and the rest in equity funds. (Level prudent risk more acceptable.)

# 4: Open a Roth IRA

Once you're done maxing out your 401k, an IRA opens and maximize their contribution, too. A man of 40, the claim is fully able to participate in a Roth IRA, an additional $ 5,000 per year to add to your retirement savings.

Contributions to a Roth IRA tax-free and fruiting can be withdrawn tax-free. You can even avoid the tax on capital gains.

# 5: buy sufficient insurance

Disasters are the main reason that people are forced to declare bankruptcy. Reduce your risk by purchasing adequate health insurance, disability insurance and car insurance.

If you have dependents, you should have a term life insurance for a period of time, their families rely financially on you. Many financial experts say that life insurance is usually not as good of an idea, especially if you are in the politics of his 40.

These are just general observations; Send to a financial planner fee for personally tailored advice. Look for planners that a "fiduciary duty" to have you as a customer.

# 6: pay off debt

Pay off credit card debt, auto loans and other debts with high interest mortgage or not.

Considering whether additional payments to make on your mortgage. If you are the mortgage in the early stages, and many of your payments applied to interest, would make more sense to make additional mortgage payments. However, if you applied in the later years of your mortgage and your payments are primarily in the main, it may be better to invest the money.

# 7: Remember, you and your spouse comes first

The retirement savings save not to send their children to school. Your children have more choices and opportunities that you do.

Your children can students take loans. You can not a "ready for retirement." Take

Your children have a life ahead of them. Time is on your side. Time is not on your side.

Children can save for retirement to start at 20 and 30, you can not.

Your children are now adults; let stand on their own feet. The best gift you can give them their own financial security in retirement.

Triple your money with these simple rules

Some of the most important things that require mathematical skills that are the reason is that I learned in the fourth grade. Simple multiplication and division of two numbers tripled help my money.

There are two empirical rules of thumb that I use when I calculate how an investment will be profitable. One is the "rule of 72" The other is called the "rule of 115"

Read more: Here's another rule of thumb to decide how much at home, food and fun to spend.

Article 72

Article 72 states that show how fast you double your money. Share 72 by the interest rate. This is the number of years required to double your money.

For example, if you earned your money an interest rate of 8 percent, you double your money in 9 years (72 divided by 8 equals 9)

If your money earn interest at 5 per cent, double the 14.4 years (72 divided by 5 is equal to 14.4.)

If you earned your money meager interest rate of 1 percent, you have to - yes, you guessed it - a whopping 72 years to double.

Remember: This is a "golden rule", no iron clad law. Article 72 does not refer to the details that correspond to a significant dent in your statements, such as taxes and the costs of managing the fund.

But it's a useful guide to making a quick mental calculation of how long it will take to put up $ 10,000 $ 20,000 in. It is also can be a great reminder of the power of a single percentage point.

The difference 6-7 percent sound much. But the difference between double your money in 12 years compared to 10.3 years for your money to double seems much more important.

As a side note, the Rule of 72 assumes that the money "compounded annually" - a term that means that once a year, added interest to your principal and the entire amount is reinvested.

(Interest is the money that you have earned, the main money you started with.)

Rule 72 is also useful to illustrate the power of compounding tool -. Quoted "The most powerful force in the universe" Albert Einstein is as follows

Read more: The reason that the rich budget to.

Article 115

I recently learned of the rule of 115, which is a logical consequence of Article 72, if you think you is to double your money is not good enough, then Article 115 is for you. Overall, this shows how long it will take to triple your money.

I bet you can guess how the rule 115 parts of the interest rate by 115 It's time to triple your money.

For example, if you earned your money interest rate of 8 percent, which is expected to triple in 14 years (115 divided by 8 equals 14.3.)

If you interest your money at 5 percent, which is expected to triple in 23 years (115 divided by 5 is equal to 23)

Note that triple your money is simple - in a sense - to double your money. If you earn an interest rate of 5 percent, who spent 14 and a half trying to pass, but to triple only another nine years.

Read more: The basics of investing for beginners.

Compound interest is your friend

Also thanks to the power of compound interest. The greatest interest your money earns more money will work for you.

This assumes, to reinvest the interest, instead of spending it on new clothes or games.

Read more: The costs nothing and to save budget (if you invest and may be rich)?

I told a friend about these rules once, and they asked a fantastic theme - "How can I reinvest the interest How can I know whether I want to or not"

"If you do not receive each year, a check or a payment of your investment," I replied, "is likely to reinvest the interest."

See page - or computer screen - where you buy your money. You should see a little box that says. "Reinvestment interest and dividends" This picture will probably be there, whether you. In mutual funds, stocks, bonds and Exchange Traded Funds

Check this box, and then forget about it. Wait 14 years. Adjust triple your money.

How can I budget with irregular income?

How can the budget if your income is irregular?

Say you are an independent contractor, or you are independent from the other. You do not get regular checks every two weeks. Instead, get the payment random irregular intervals.

A few months make twice what you did last month. Other months, to make half of what you did last month. How the hell can a budget with all this randomness to keep in your life?

Here are some tips to help you budget, despite its irregular income.

Step one: Look through the records of his last two years of income. What is the money you have made in a given month? What is the less money you made in a given month? And what is the average?

For now we will focus on less if you have made in a given month.

Step two: Use these sheets to a system based on the minimum that you can arise in a month in the last biennium budget.

What was the least that he has done, you can assume that the majority will be in the future a little more than that each month. But you have your budget all you have done to support keep a safety margin.

Perform all of your expenses - including fixed and variable costs - and see if you can make it fit into your budget, based on the minimum you won in a month. If you can not, then start a list of your expenses for the most important to least important.

This worksheet will help you go through your needs. The needs are by definition the most important items on your list. Include food, housing, electricity, water and other things that you could not live without reasonable.

Discretionary items, on the other hand, spending less on your list. These are the prices that is cut when you try to fit your budget your income will be.

Step Three: Create a plan for your money "excesses." Remember, you are on the minimum they have acquired in the last two years, the budget is based. If the other 23 months are signs, you will earn more money in most of the time.

Create a plan of what you now with that extra money to do. Otherwise there is a risk of blowing through you.

Would you like to save money to buy your next car with cash? Want to open savings funds for the education of their children? Do you want a large retirement account that the money to pay the debt to create or set?

Determine your goals and put all their excess money to her.

Step Four: When the check comes, divided according to their budget categories.

Let's say you created a budget in five categories. You have decided that you are willing to put their money on housing, 15% profit on debt spending 35%, saving 10%, 15% for transport and 25% on everything else.

If you get a check from a customer, immediately share the check in the appropriate categories (after the first cancellation of the corresponding income tax). You can even cash the check and the money in envelopes, so you use an envelope budgeting strategy.

Parts of each check that is the case, you can ensure that your budget is with their ideals percent Aligned. In other words, you will not risk it, 50% of the money for discretionary items, and there is not enough food.

Step Five: Create a large cash cushion.

If you have a fixed income "cash cushion" is your best friend.

By maintaining a balance of several thousand dollars on your account, you have the flexibility to deal with months, when customers pay slowly.

A bankroll is different from an emergency fund. The pad is only there to make sure that you pay all your bills while waiting for sporadic and irregular incomes are in your mailbox. However, the emergency fund is a separate account that can not be touched, the worst case unless developed.

I seriously about getting out of debt? 7 of Th ...

Getting out of debt is the crucial step, for the financial stability. In a normal year, the average consumer spends thousands of dollars in credit card debt, auto loans and mortgage payments. In November 2012, the average household had $ 7,194 in credit card debt. (Source: Survey of revolving debt to total consumption of the Federal Reserve of the United States).

Since many credit cards have a 15 - to 25 percent interest rates, consumers are losing hundreds of dollars in interest per year.

Here are seven tips to help you get rid of your debt.

1 Make a budget - people into debt because they spend more money. A budget will help you avoid going that way. Can you see how much money you earn and where the money goes. It allows you to find the areas where you are losing money by eating at expensive restaurants or a coffee, $ 5 per day.

Create a low budget you can pay for necessities such as rent / mortgage and utilities. Aside to pay the rest of your debt as quickly as possible. Must not come in the purchase of luxury goods until you have conquered your debt. Highlighting hair, buy new clothes and eat in expensive restaurants are not necessities.

Read more: What is a demand, and what is the need?

2 Leave your credit cards - Cut your credit cards if you have debt. Throwing cash instead. Paste the budget you created and only buy what you can pay cash.

Credit cards have high interest rates. The only people who should take credit cards are those that can avoid the temptation to spend too much. If you think you can go to the temptation to completely remove credit from the image. Leave your cards at home. Better yet, freeze your credit card in a block of ice, so you can not use a boost.

Read more: 7 times to avoid credit cards

3 more than the minimum - the credit card companies take advantage of the interest many users to pay as the minimum monthly payment. It is good for the credit card companies, but bad for the wallet.

Suppose you do not have to make $ 5,000 in credit card debt with an interest rate of 18%, and the minimum payment of $ 150 per month (3 percent of the total bill). It only takes 3 years and 11 months to pay off the debt, and you spend $ 2000 dollars interest. That's a lot of money.

Responsible owners pay credit card bills every month. If you can not, then at least pay more than the minimum each month until the debt paid.

4 largest debt first - you have a lot of credit card debt? Many consumers are so overwhelmed with debt that they do not know where to start. There are two possibilities:

The snowball method - Start with the smallest debt cards. Focus on paying all that, as soon as possible, even if it means that you can not make the minimum payments on credit cards. The sooner the better debt is gone. Once the smaller card is paid off, then repeat the process with the second smallest, until all the cards are paid.

The stacking procedure - Start with the card with the highest interest rates. Refund as soon as possible, while only the minimum payment on credit cards. Once your debt paid back, plus interest, to concentrate all his efforts on the card with the highest interest rate high.

Read more: The snowball method to batch process

5 to renegotiate mortgage rates - renegotiating your mortgage interest rate will save you more money per month. For example, if the interest rate from 7% to 5% on $ 150,000 mortgage will save you $ 192 USD per month. (Then you can apply the money to pay for your credit card!)

Not everyone is able to renegotiate your mortgage, but if you live by job loss or serious illness in a difficult financial situation to renegotiate many lenders long as it. For your primary residence Many lenders are also participating in the Home Affordable Modification Program by the Federal Government. The requirements for this national program has $ 729.750 or less, spend more than 31% of your mortgage, their mortgage and obtain beginning before January 1, 2009.

6 refinance mortgage rates - Refinancing is another option for homeowners looking to get out of debt. Refinancing does not pay (or give) your debt. Instead, your mortgage at a lower rate restructuring.

The refinancing reduce your monthly expenses, you also have the closing costs. Closing costs vary from a few hundred to several thousand, depending on the value of your home and the size of your mortgage. In some cases, the closing costs can be more expensive than the actual savings you will get from refinancing. Compare how much you save by lower interest rates in comparison to what you closing costs. Select the option that gives you the most overall savings, even if it. Higher monthly payments, which means short-term

Read more: 4 tips to reduce your monthly mortgage payments

7 Start saving - Once you have finished paying off your credit card debt, start that more money in a savings account instead of rushing to buy a more expensive item with a credit card. Make it a habit to register in advance for purchases instead of in debt to them.

Read more: you create multiple sub-accounts, savings

Test five single budget

Want an investment plan, also known as a budget but do not want a detailed budget as complex as the kind that could be facilitated by these budget sheets to create.

Instead, what you want is a budget that is a "big picture".

At the same time, you do not want a budget that is as wide as is described in the 80/20 or 50/30/20 household budget. Want a budget that is a little more specific and structured.

They want the economic Goldilocks, a balance between the two. You want the kind of budget that you can divide your money in five or six categories: not too little, but not much.

What should you do?

Here's a breakdown of what your budget should look like when it is said to look in five categories. This budget is the editor Jean Chatzky revealed today show debt diet Oprah Winfrey. And here we go:

The unit must contain 35 percent of their income to take home. This includes mortgage or rent, home repairs and maintenance, property taxes, utilities such as electricity, gas, water and wastewater, and the owner or tenant insurance. In short, it includes all housing costs.

Transportation should not take more than 15 percent of your income to take home. This includes car payments you are finished, gasoline, car insurance, repairs and maintenance, the amount you pay for parking, or (if you use public transport), the amount you pay for the train or subway train ticket. Remember, the transport not only your car payment. It contains everything., Payment of your car, oil change, and developed his new film radiator and timing

Other expenses, which are primarily discretionary spending represents 25% of their income. This includes food, buy concert tickets, buy new clothes, attending sporting events, and take the family on a great holiday.

Economies are expected to consume 10 percent of their budgets. It is primarily for retirement and build an emergency fund.

Debt settlement is expected that 15 percent of their income to consume. This includes your credit card or student loans. Does not include mortgage payments or minimum car appears in the "housing" and "Transport". (You need the additional payments of your mortgage and auto, over and above the minimum.)

You may be thinking: Wait a second, why do you advocate a savings rate of 10 percent? You do not have budget for 80:20 and the two kinds of 50/30/20 20 percent savings avocado?

Yes, she did, but as you can see in the 80/20 budget and the 50/30/20 budget "savings" include the payment of debts.

This category five household savings and debts are listed in two categories. With 10 percent, with 15 percent for the other, you are 25 percent (total) on a combination of savings and debt repayment. This is even more aggressive and ambitious than recommended the previous two budgets.

Category Five Use This budget, if you have a budget that want to provide a bit more detail, but not too much.

The 5 most popular stock indices

Not the S & P 500, Nasdaq, Dow Jones Industrial Average. These terms in the news you hear thrown, and you know that these words only vaguely related investments. But not sure what any of these terms really mean. Who is it?

Here's a primer on the whole investment terminology.

Market Index - The S & P 500, NASDAQ, Dow Jones, Russell and Wilshire are examples of an index provides a summary of the overall market by controlling certain key actions in this market index "market .." An attempt by a representative overview of the direction overall market is led to give.

Not necessarily to recognize indexes all individual actions. Some tracks try small, medium and large companies represented, while other indices represent only the largest companies. Some tracks are to follow in general the companies in a particular industry, such as technology, while other indices are wider.

Fun Forum: journalist Charles Dow created the first index, more than 100 years. In 1896, Dow average share prices of the 12 largest listed companies. (He said his prices and values are divided by the total number of shares.) Where he discovered he could generally follow the movement of the market, including the general motion (on average) populations, which were not included in the financial statements.

What are the most popular market indexes?

The S & P 500 - This index 500 leading American companies in a variety of industries and sectors. Shares of the S & P 500 about 70 percent of all shares traded. "S & P" means "Standards and Poors", the name of a market research firm.

Company can be listed in more than one index. Some of the S & P 500 are in the Dow Jones Industrial Average.

The Dow Jones Industrial Average - The name of Charles Dow, the index of the 30 largest American companies. This means that the business is "large cap", which is the industry term for "Big Business", as Johnson & Johnson, McDonald's and Coca-Cola. Although the Dow Jones companies make up only about 25 percent of all shares, the DJIA is widely recognized as a leading indicator of market health.

The Wilshire 5000 Index - This index has gained 5,000 companies of all sizes and shapes, from gigantic to the smallest of small businesses. (In the terminology of the industry, be it as a "large cap", "mid-cap" and known as "Small Cap"). The Wilshire 5000 is often referred to as "Total Market Index." It is interesting that, although the representativeness of this index is not as popular or tracking the Dow Jones and the S & P-500.

The Russell 2000 - The Dow Jones focuses on large companies, but the Russell 2000 does the opposite: it follows that smaller companies. This index is 2000 smaller player on the market.

If you think that 2,000 companies is too small sample size and a wider representative snapshot of how companies are looking for small cap shrouds, you can also its sister index, check the Russell 3000.

NASDAQ - I saved this for last, because it can be a little confusing. "Nasdaq" both an index and a stock exchange. Let me give a little and give you a few facts:

There is a market where people go to buy shares. This market is called "exchange". The most famous is the New York Stock Exchange. There is also a famous called the Nasdaq Stock Market.

The shares are traded on the NASDAQ stock market tend to be technology companies like Apple and Google. Of course, companies in the Nasdaq means to be not as big as these two symbols. Small companies like Angie's List (the site that offers peer-to-peer reviews of home repair contractors) and 1-800 Flowers, (the site which offers flowers) are also listed on the Nasdaq Stock Market.

Nasdaq traded banks, airlines, including Spirit Airlines, and even some non-technology companies such as Starbucks and footwear company Steve Madden. In other words, there is no plaster model law that says high-tech companies traded on the Nasdaq. Nasdaq tends usually just a lot of high-tech companies keep.

The Nasdaq market index, known as the "Nasdaq Composite", follows the 3,000 companies listed on the Nasdaq. What is unusual because no other change has its own popular index. The evening news is not the stats read "New York Stock Exchange composite."

Large and small - - do the Nasdaq Composite has due to its wide acceptance as a shorthand indicator of how industry and technology-innovative companies become popular.

What is & quot; paid first & quot; Media?

One of the most important principles of personal finance is "pay yourself first."

However, many people find that the sentence is confusing. If you are independent, you can not as someone who "paid" to conceive themselves. You get paid by your boss. Or?

What do you mean with the first payment and how they relate to the households?

What it means

"Pay yourself first" not on how to obtain earn money, as opposed to what the sentence means. It refers to the way in order to save money.

The term means that you are to pay their own savings accounts, and the first. For example:

Why "first"?

Most people say they can not save enough money for retirement enough, or invest better, or save an emergency fund large, since they do not, save the money for more.

That's why personal financial advice says you should pay these bills first. Treat it as a law. Approach the same as you treat your phone bill or electricity bill.

In fact, the priority over all other accounts. To the "bill" the most important that you save to pay. The payment of the invoice first.

For what? Since this increases the likelihood that you will actually save a significant amount. Converts will save you money from a "desire" in need. Your retirement and emergency funds are paid to a bill each month.

But I can not keep up!

Many people say that they can not meet their current accounts. If you pay first, literally running them to come before the rounds of the money, they say.

Most experts responded that people should undertake in any event to pay in the first place. Once you make the commitment, they need a way to pay your bills to find others. You may need to take a second job. It could mean cutting some bills, like cable TV. Probably a combination of both earn more and spend less necessary.

But here's the problem: most people are not enough to have a second job, take second-hand clothes and cut your cable TV for the sake of commissioning an additional $ 400 a month to motivate your account retirement. However, they are motivated to do so if they are in danger, are in default on their bills and enough of your heat.

"Pay yourself first", in other words, is a personal financial advice that beats in the people who make and why to save money heart.

Analogy

Why do many experts recommend exercising first thing in the morning, at the beginning of each day? There is a physiological reason. The human body does not have physical capacity to work by 6 clock necessarily in the high

Instead, it is a psychological reason. Many people say they have no time to exercise. And in fact, if a person goes to work and then later try to exercise often skip the gym. The need to stay up late at work, taking a child to soccer practice, running errands, or do a number of other tasks.

Therefore, experts advise people often pay attention to first thing in the morning to practice and then make your day.

"Pay yourself first", which works on the same concept. When people try to pay for everything else, and then save it, often find that they left nothing more. But if people save first, then to pay the bills, to force yourself to make ends meet.

7 small businesses can be started on the side

Before you begin, more money, ask yourself: Do I want to start a small business? Am I ready for this commitment and responsibility?

Or just want some extra money to earn a small amount of commitment and responsibility required for tasks?

There is no "right" or "wrong" answer - you have to be honest about their goals and their free time.

I recently wrote an article about how you can make more money on the side, especially doing jobs "weekend only" required minimum responsibility.

But if you want to start a small business - or part-time, seasonal or full time - here is a list of ideas.

# 1: Blogging - It's hard to earn money blogging, so I recommend it only for people who do not "need" to do a cent of revenue in the first year see blog! Blogging is like any business is growing: In the first six to 12 months are likely to work 20 hours per week, money for web hosting and design, and see little of their efforts. They also "learning mode" you will be more and more to discover on other blogs in your niche.

But after a few months, you can see (hopefully), the advertising revenue starting role. Try this if you are in a long-term business with the possibility of a great reward, as long as patient with your progress.

# 2: Cleaning houses or offices - If you work a standard work from September to May and is looking for extra work at night, office cleaning could be a great game. Finally, most businesses want and purified on weekends their offices when staff are not there. You can also water the plants as a "supplement" and if you are ambitious and successful, you can even a company to cleaning offices and hire assistants. And unlike many commissioned works, cleaning can not be assigned to a virtual assistant.

If you work odd hours and you are free, 9-5 opposite approach and consider cleaning houses. Like to clean people usually their homes, if it does not get in the way. Again, you have the opportunity to start a business and hire assistants. Remember, the mileage deduction!

# 3: Assembling of furniture - you know how some people get frustrated trying a crib, dresser, bed, or a library to assemble brought home? (I certainly do - I'm terrible mounting things.)

If you do well to write for them in the furniture assembly, why not advertise on Craigslist offers? You can something together for IKEA shelves frustrating cribs come with instructions that say, put "Put 4B Annex IA-2 column."

Because office cleaning, installation of furniture is a business you can start solo and finally to collect a person enough customers again.

# 4: People electron configuration - furniture is not the only thing that people need to connect to. Computers, televisions, wall systems home theater sound - all these devices must be configured, and many people are willing to pay for a technically competent person to do this.

You do not need a computer programmer to start this business; You just have to be comfortable enough to develop with the computer PC and Mac, and even help most customers Technophobia comfortable.

# 5: Photography - Many sites archive photos, allowing users to upload their best photos in high resolution. Customers - such as magazines, websites and PR companies - look at these pictures and pay a small fee to use an image for the company team. Profit margins may be small, but if you have enough photos on the website, you can generate a small amount of residual income.

# 6: wedding cakes - they have a knack for baking and beautiful presentation? While love is in the air, there is always a demand for wedding cakes, especially in spring and summer (the season of traditional marriages.) Wedding cakes are also in vogue.

This could be a fun to-build, but check in your first state, the laws - each state has a different field must have requirement for this type of food preparation, and some states will not let you into the world of venture pastries when access to a commercial kitchen.

# 7: Landscaping - Planting flowers is the fun part, but a landscaping company should also carry dirt instead of rocks and stones, soil mixed with compost, dig French drains and - perhaps most important - to work with the owner of the landscape plans. They also have a lot of lawn care: clean nozzles at the end of the season, bubbles and leaves, the edges of the court.

You definitely need a team to help with landscaping: You can start this business with a partner, as it is so time and labor. Will do soon, most of the organizational work: to find a job, billing and coordination of logistics, such as ensuring that the right equipment happens to every task.

The budget ABC method: An airplane in 3 easy steps ...

Here is a simple formula to help your budget: The ABC formula.

The budget is formula with Bankrate.com, which originally published this three-step process so that you credited to manage your budget.

A is for "automating" - Automatically sets aside money from each paycheck into a savings account or investment. Do not trust yourself to do this step manually. Instead, specify an automatic biweekly or monthly contributions to their 401k, IRA and savings accounts.

B is for "bills" - These worksheets budgeting to determine the amount you spend each month on your bills. Then set aside money in a checking account that is dedicated exclusively to the payment of their bills.

C is for "cash" - Once you have paid first (money for savings and investment store), and to save money on your bills, you can spend the money goes.

There you have it! The ABC method is a simple budget three-step plan to help you manage your finances.

How to create a budget, you can (actually) Adhere to

Budgets are to be generally large in stock, but it is difficult in theory.

That's because many deal of us with budgets more wishlists (like we would spend our money, in a perfect world) instead of directives based on the reality (the way we do our money to achieve our financial goals spend) .

, A budget that really works, and it allows you to create a comfortable and happy life, you should spend a fixed idea of what happened to you, what you can really afford, and what your priorities are.

You have trouble sticking to your budget or not moved to create one, here is a simple step by step guide to help you create a budget, you will actually be able to follow.

1 to find a system that is comfortable

If you want to keep track of everything is to see exactly where you're money is going, set up a spreadsheet in Excel formulas to use, so you do not have to keep adding things by hand. Make a point of collection of revenue and accounts at the end of the day (or week) and update their numbers.

If you prefer a lot of time to control your spending without invest, use a site like Mint.com, you will connect to your bank accounts and credit cards for their daily transactions automatically filtered predefined budget categories can. You can see at a glance where your money goes, without seeing all yourself.

Whatever you choose, make sure it is one that nice that you feel. Partly it is for you to maintain and control, the more likely you are to stick to it.

2 Calculate your total income

How much money is currently going on? This is your take home after taxes and things like 401K deductions subtracted. , Regular checks for payment, part time jobs, extra income, etc.

3 Calculate your total cost (required)

How much money is spent on the needs? These include utilities, rent or mortgage, car payments, medical bills and groceries.

Expenses as you are resolved your mortgage or car payment, that is, you pay the same amount every month. Others, such as grocery stores, are variable and will be a bit more difficult to calculate. Give your best estimate of how much you spend each month, when you consider that you can always adjust later. (See step 7)

4 An estimate of your discretionary spending

To a budget that will not make you unhappy and you are more likely to follow to actually create, you have to allow some money "fun". How much depends on what your current financial situation seems, and the things that bring more joy.

Perhaps more than we can now afford a cheap rental Redbox is every weekend. Maybe you can set aside for a nice dinner $ 50 / week. Opt for discretionary purchases are of the most important and understand how you can make room for them. You can not take on any TV or clothing, for example, but decide that you want to make room for the theater and traveling.

5 Our additional costs

Not all costs are regular monthly expenses. Things like records water bills quarterly and annual car can not be in their radar month, but always predictable, so you have to make room for them in your budget.

To ensure that they do not involve unexpected costs that a gap in your monthly budget for the occasional expenses and set aside a little each month so that if your quarterly or annual bill comes, money available, to have them pay you .

6 Click on a point to save

Every month, you should set aside money in savings three main goals:

• Emergency fund (3-6 months of income for unexpected expenses such as illness or accident)
• Pension funds (401k, IRA, etc.)
• Personal goals (saving for a family vacation, a down payment on a house, college fund for their children, etc.)

Decide how much you can reasonably contribute to the goal, and if necessary, change some of your variables and discretionary spending to save even more. Saving is something that too many people have pushed to the back burner and regret down the road. Be proactive and make a plan to save a portion of their regular budget.

7 opinions and Tweak

Circumstances change. Change our priorities, change jobs, move, have children. Make an appointment with yourself every few months to sit with your budget and make it work for your goals and current circumstances. If you have already connected with your program or web page numbers, it is easy to play with your budget categories to see where you have to create more space or to prioritize one thing over another.

Remember, your budget should work for you and not vice versa.

Teaching children to budget money

It is important to teach children budget and save: The big money habits from an early age.

But how can your child, household money to convince for a rainy day when a tantrum because he wants a toy?

Here are some tips to teach children budget and save:

First step: Let your child to explore the relationship between work and money.

I know that a couple with two children, 8 and 6 year old son both think the money "comes from" an ATM.

The son asks for a new game. The mother said it would cost too much money. The son replied: "Go easy on that machine and get more money."

These guys have never worked in his life of 6 years, so that they do not understand one day that money is the result of their efforts.

A child is motivated to save not the money that you have is directly to the job you are expanded in context.

Example: Create a table showing the duties and the amount of pay for each task lists. Sweep the floor will be worth 50 cents. Loading the dishwasher may be worth 75 cents. Can mow worth two dollars. (The problem, of course, must be age appropriate).

This proposal - to pay for the work - is actually somewhat controversial. Some families believe that children should be required to do tasks without additional compensation, so they can be to your home together contribute.

If this is your philosophy, then you could consider the child needed a standard of basic tasks - such as putting clear away toys, the table, the table after dinner - as part of their contribution to the household. Everything that are a child go "beyond" their normal duties rewarded with pay.

Step Two: Set Three glasses of money: saving, spending and sharing.

If your child asks for a toy, he knows he has to buy the toy with his own hard earned money.

Your child will soon find that not only earned $ 1.50 this week, but the toy he wants costs $ 12 How can you save? What should you do with your money in the meantime?

This is when the "Three pots" Set lesson in three pots for your child. One for saving money, spending money, and to share the other.

Whenever your child, helping his budget among the three pots of money is paid. Some of it immediately goes into the pot, the expenditure in the short term: a chocolate bar, an ice cream.

Part of the money goes into the pot of "savings". Your child should choose your savings goal - perhaps wants a PlayStation game or cell phone again. Whenever he gets paid, he can see his "balance" to grow.

The third glass should "share". Your child needs the thing which he shares to choose his money. Your child may decide that put the money in the collection basket in church, give it to a shelter, donate to a group that helps disabled veterans, or hold an acre of rainforest.

But where it is coming from the Three glasses procedure?

The method of the three pots - saving, spending and sharing - was popularized by the popular Muppet Elmo on Sesame Street television program for children.

While on Sesame Street, Elmo sees a ball of colored love - "Ball astonishing" the - But no need to buy $ 5. Elmo only $ 1, which means that all you can afford is a stink bomb.

So begins Elmo Sesame Street do housework. He earns $ 1, to repair an ice machine. He wins a $ 1 bottle recycling, and $ 1 more folding clothes.

. As Elmo wins, he tried to go at some point, some of the Muppets sing background:

"On Wednesday, I wanted to buy ice Elmo Elmo coveted But all was not lost -. No, at this day, except Elmo"

Finally, Elmo Saves $ 5 and goes back to the store to buy a wonderful ball. But on the way he meets a deranged cookie monster is angry because he order enough money to buy a cookie.

Action Cookie Monster Elmo with $ 1, and simply buy a $ 4 Fantastic ball rather incredible ball $ 5.

It & # 039; is to save for! Excerpt corpses ...

Retiro, a wedding, a trip to Tahiti - who want it all. Who does not?

You have some money in your budget, how to spend the "savings". This is an important first step.

But there is a long list of savings goals. Approaches its tenth anniversary. Their children to college soon. You want to retire. You should replace your car.

How to juggle all these savings goals? Here are some tips.

In fact, the interactive personal schedule can be found in this budget calculation sheet.

# 1: Your emergency fund is in the first

Whatever the size of other goals, building an emergency fund should always come first.

Make an emergency money for the worst scénarios- money aside. If you are from, subject, if the motor breaks explode in your car or home furnace, the emergency fund to save the day. This is your safety net.

Many people make the mistake of thinking that your credit card be used in an emergency. Credit cards should never be used as a safety net. Credit card debt creates problems, not solve problems.

Experts do not agree, you should put aside for emergencies on the amount of money, but the general consensus is that you need to save 3-6 months of living expenses. (Some experts believe that you should save 9-12 months costs, especially if you're self-employed or if your job is in danger.)

# 2: Your retirement is the head

The pension is almost equal to an emergency savings fund to be addressed with the highest priority.

Many parents make the mistake of giving priority to the rescue of college fund for their children, instead of money for their own retirement. While it is of course to be Studies want to pay for their children, it is a big mistake.

His children are young; have a lifetime ahead of them to repay their loans and save for their own old age. You - as parents - not have that luxury. They have a range time horizon, prepare for retirement.

Remember, the students take loans to students. Never take a "ready for retirement."

# 3: Pay off your credit cards

Pay your credit cards is essential to good financial health. Repayment of the credit card must be above all other objectives, with the exception of emergency funds and retirement plans.

If you have a high interest credit card debt, you must have a minimum of $ 1,000 on hand in an emergency fund, and save at least one reference amount for retirement. Apply to pay the remainder of your savings off your credit card debt. For more information about creating your first budget, to help keep track of all of these goals.

Some experts do not agree with the proposal of $ 1,000. They argue that people with high interest credit card debt should save 3-6 months of living expenses before they pay their debts.

If you have a credit card debt, you need one of the options will help you sleep better to choose at night. Save a minimum of $ 1,000 in an emergency or a maximum of six months of fund costs.

# 4: consider what might trigger future debt

Once you have an emergency fund for retirement savings created and pay their existing debts, the next priority should be to anything that might cause you to store into debt in the future.

Look 5-10 years in the future to events once every 10 years, you can run into debt if you are not willing to anticipate. (Remember, your emergency fund should only be the last resort, snacks.)

Learn to read more about saving time fee or by the following examples.

The car example: you know that it is very likely to change the car. Start saving to buy your next car in cash for you - instead of a car loan - by monthly "car payments" to you.

Say you are in the habit of a monthly payment of $ 200 on your auto loan. Once you have paid off your car, keep doing a monthly payment of $ 200 - unless you now have to pay yourself. Set up the money in a special savings account that you spend when buying your next vehicle.

Home Example: If you are an owner, you may have your roof to replace your carpets and large appliances such as refrigerator, washing machine and dryer. Instead of financing these purchases, create a fund to save these costs once a decade.

The school example: If you want to go back to school or send a finishing school or their children to college, start now to save, so you do not have to take loans to students. (Remember - your retirement comes first!)

The example of the marriage: If you are willing to borrow to pay for your wedding, start saving now - even if you have not yet met that special someone. Try this interactive worksheet that you want to save for things "fun."

25 small ways to save money every day

Looking for other ways to cut some money out of your budget? Check out these 25 tips on how to save money in your daily life.

1: Budget! This is the cornerstone of any smart financial planning. Use these worksheets to guide their spending and savings habits.

2: Remove all the debts as soon as possible. You can save hundreds or thousands of dollars in interest. Read these tips on how to pay off the debt faster.

3: Cut a large number of these "extra" costs. Paint your toenails instead of getting pedicures. Brew coffee at home instead of buying coffee. I know that "more Buy Latte" is a cliché, but it's become a cliché because it strikes a chord with so many people.

4: Combine, so you can save on fuel costs your errands in one trip and a week of mass term.

5: Reduce / cable TV and satellite internet packages. Do you really need 500 channels?

6: Keep copies of your documents in folders or envelopes, organized by the store or months. You'll need something for the injury.

7: If you own a home, crunch some numbers to see if you can reduce your monthly payments by refinancing your mortgage.

8: If you pay mortgage insurance (PMI), and believes that there is sufficient capital to waive the PMI, call your lender to begin this process.

9: Reduce the amount of dinner. This alone can save $ 100 per month or more.

10: Court of minutes from your phone to the lowest amount you need. A reminder to check, so can your plan to avoid additional charges, change your car calendar with minute the bill is due four days ago.

11: Service and maintenance of your car. It can feel like an additional expense, but it will save you money in the long term.

12: Buy food in bulk at wholesale stores like Costco or Sam's Club.

13: Shop at flea markets, thrift stores, eBay, Craigslist and.

14: Teach your kids about money. Earn money for jobs - 50 cents for $ 1 for it. Give your money for a video game or toy they want.

15: selling or trading in your gas guzzler for a more fuel efficient vehicle. If you live in an area with good traffic, ride the subway or bus, or consider a family car.

16: Plant shade trees to help around your home, saving money for air conditioning.

17: The devices are connected to a power outlet. Set the trigger when you are not using one of these devices. The slow outflow of energy that comes from keeping connected things - you'll save on the cost of the "phantom power".

18: With the library instead of the bookstore. (Yes, the figures Kindle library!)

19: With a picnic or playing ball in the park. This is much cheaper than buying tickets for the zoo, the movies or the park! (Check out these four ideas Frugal date).

20: Online price comparison before buying something at a store.

21: Join a gym, when you use your membership regularly.

22: Take shorter showers.

23: sealing and weather-seal all projects and gaps around doors and windows.

24: Keep your home a little warmer in the summer and a little colder in the winter. You do not need to go overboard - just the thermostat for an additional period of 4 degrees in the summer and another 4 degrees in the winter.

25: Put an insulating blanket water heater. This prevents heat from escaping.

To leave S 7 Baby Steps ...; Dave Ramsey & # 039

Try to dig your way out of a mountain of debt? Popular financial expert Dave Ramsey, host of the nationally syndicated radio program, The Dave Ramsey Show, shows that you follow these seven "baby steps" that you pay the debt and build wealth.

Baby Step 1: Participate in a $ 1000 emergency fund

An emergency fund, which is also known as "emergency fund" is money set aside in case of great urgency. It is not an account that is tapped to go on vacation or buy a new vacuum.

Even if you have a huge credit card debt, Ramsey said, you first need to in an emergency fund set aside $ 1,000. Only then will the fight start your debt.

Read more: What is an emergency fund?

Baby Step 2: Pay off your debts

The second step is an important step that could take years - pay all debts except your mortgage. Ramsey defends a tactic called "debt snowball" in which up to the largest scales pay the debts in the order of the smallest, regardless of the interest rate equilibrium.

It is a controversial tactic. Most financial experts recommend "stacking the debt," the reward of a debt of about interest rates. More information about the snowball debt against debt pile.

Baby Step 3: Create an emergency fund of 3-6 months

Once you pay all your debts, create an emergency fund to 3-6 months to cover costs. To save borrow again, when faced with a serious crisis, such as the massive job loss or medical bills.

Baby Step 4: Save 15 percent of your income in retirement

Aside 15 percent of their total household income in retirement accounts such as a Roth IRA, 401k or other traditional. Do not worry if your employer does not offer a pension plan - you can add your own Individual Retirement Account or IRA.

Baby Step 5: Save for College

Then start saving for their own good college or university education of their children (or both!) With 529 plans and Education Savings Accounts Education Savings (ESA) is recommended as their savings vehicles.

Baby Step 6: pay the mortgage!

Now is the time to make every penny to pay off your mortgage faster. Why wait 30 years to complete the payment of real estate? You can aggressively pay principal and be completely debt free, including your home!

Baby Step 7: create wealth and give

Now that you save 15 percent for retirement, which is (including mortgage) debt free, and are willing to send their children to school, it's time to concentrate wealth creation (investments, entrepreneurship, etc.), and give alms.

Source: 7 Baby Steps Dave Ramsey

Share expenses with family

How can a few charges divided evenly if each earn different amounts?

Some couples put all their money together into a fund, which is jointly "our." But what if you do not want to do?

Some couples prefer to keep their money separate, even after they were married. They each chip together certain costs, such as mortgage or rent to pay.

The breakdown of costs for raw dollars, however - such as separation from the point of $ 100 in increments of $ 50 each - is not sustainable if both people have very different wages if the couple is actually $ 200,000 per year, while the other makes $ 20,000. one year can feel heavy, ask them to share the cost of the mortgage each partner.

What can be done?

(See also: Are you financially supported?)

How to separate accounts, but fair

If you are required to maintain separate books, try these tactics: Share your costs based on a percentage of their income.

For example, you could agree that each of you make a dent in 35% of their income on housing costs. The partner higher incomes pay more money (plain silver), during the marriage, who earn less, pay less money in the first place. But both partners pay the same percentage of their income.

Food, utilities, veterinary care and more - you can do this with all budgets.

(See also: Budgeting for Beginners)

What other options do we have?

Note that this advice applies to couples who want to keep separate accounts and both chip for common expenses. This is not the only strategy that can be used to "separate" to keep couples pools money.

Here are some other ways to keep the couple separated money:

Assignment - Each member gets a "subsidy". This can make the same amount of money (premium dollars) either, or can be proportional to their income. This allows each partner to your allowance on what they want to spend while keeping the majority of your money in a common fund. This is a very useful strategy, if one spouse is a shopaholic to be during the other tends to be cheaper.

Selection - Each partner supports some bills. A partner pay the mortgage, while the other pays for groceries and car insurance. If one partner earns more than the other, he or she can choose to pay the expensive bills.

Performance Bond - A focus on putting as much money as possible in the relationship partner, while the other, the lower deserve partner to reduce back on costs, as much as possible concentrated. So the member whose time is "worth more" to maximize income, while the lowest-paid partners can practice thrift and help the duo you save as much as possible. The partner to save money should pursue, how much he or she saved to keep each month and receive a "subsidy" or "bonus" based on this amount concentrated. After all, a penny saved is a penny earned.

Spouse wage -., If a partner is a full-time parent, while the other partner works outside the home, but both sides want a separate accounting income revenue partner may maintain to pay a "salary" of full-time mother, it seems, radically, I know, but I've had success stories of happy couples to keep separate accounts, even if one of the partners is focused on domestic work full-time as heard.

(See also: How to talk to make money with your spouse)

How can I keep track of my many savings goals?

Question: How can I keep track of my many savings goals?

Answer:

Several banks allow you free "sub-accounts". By accessing online banking, you can nickname to help each sub-account to track your goal. For example, your savings account website could look like this:

Senior Savings Account: $ 50 balance

• Sub 1: New washer / dryer: $ 535 balance
• Sub 2: Back to School $ 140 balance
• Under 3: Weekend in Paris: $ 1,200 balance
• Sub 4: Emergency: $ 2,700 balance

Give each sub-account prevents you from even accidentally lowering your emergency fund for this trip to Paris. It is also likely motivated to save more quickly if you are listed your goals in each sub-account.

Many online banks, including ING Direct and SmartyPig, you can create sub-accounts and savings nickname.

If you do not want to create multiple savings accounts, you can also keep track of their goals in a spreadsheet software such as a quote, an online program like Mint.com or pencil and paper, old need.

And do not forget - you can use it to track your progress and these worksheets and household savings.

4 Tips to retire at the age of 40 and more

They are men or the age of your 40?

Are you baffled by the amount of money you need to retire?

You know how much money you need to retire, but overwhelmed by the idea of saving so much money?

If you answered "Yes" to any of these questions, check out these four tips retirement at the age of 40 and older people. The first trick will help you determine how much money you need for retirement, while the rest to find the tips that will help you to earn way more money.

# 1: How much money do I need to retire?

Blades much money in retirement as you can. If you start saving for retirement in their twenties, says the rule is that you only get to save 10 to 12 percent of the net wage. If you are just starting out in their forties, the general rule is that you need to increase their savings rate from 15 to 20 percent.

Does your intimidating? Then try this: instead should save on the percentage of net pay, decide how much money you spend per year in retirement. Multiplied to determine with 25, how much you need to save.

At $ 40,000 per year to live in retirement, for example, millions of $ 40,000 x 25 = $ 1 will have in your retirement portfolio. (Read this article for a detailed explanation of how we calculate it.)

$ 1 million may be a lot, but remember: you do not need to $ 1 million in his 9-5 job earn only GROW 1 million for their investments.

The most important factor to achieve this is a long-term horizon. The longer your money invested in a pension fund, the more it will grow. In fact, with a strategy of aggressive saving, you can create a portfolio of $ 1 million to provide only 17 to 20 years. (Read this article to learn how to be a millionaire.)

For what? In short, the more money you invest, the more you benefit from compound interest take. Passes after time, is compound interest, you can double or triple your money. Read this article for a more detailed explanation of how compound interest works.

# 2: Look for sources of current income

If your current job does not pay enough to save you $ 1500 - $ 2000 per month or more, you may want to consider finding ways to make more money on the side.

Small amounts make a big impact. If you win an additional $ 100 per week - maybe cut through the grass, child care, counseling, teaching or self-employment - and you can also cut an additional $ 100 per week from their buying habits, you earn an additional $ 10,400 per year.

(You can possibilities, find tailored for your budget to $ 100 per week? Use these worksheets budget to see where all your money is going.)

# 3: Find the source of future income

In addition to winning more, spend less and build your portfolio million, you can also use other sources of retirement income.

I know that a pensioner whose house is fully depreciated; is free from mortgage. He rented the house to tenants. Use part of the rental income to pay their rent to a better place, and saw the rest of the rental income to supplement his small pension and social security.

His case is extreme, since most people are not willing to leave their homes. However, could a modified version, rented part of your home like the basement or cottage in the law.

This is just one example of the many ways you can earn more money while you are retired. You can also give lessons, access, manage a daycare, or work as a nanny.

# 4: Delay Retirement

If you are in your 40s, you still have enough to build a portfolio of $ 1 million times. You are at least 20 years, run until the date of resignation.

But what if you are in your 50s or 60s and you realize that you drastically have enough funds your retirement portfolio? Next work.

Unless your boss or his forces retiring health, stay as long as possible in the workforce. Each additional year in the labor market is more money to save for retirement, and investments have more time to develop.