Personal Finance Advice

You are tired of the landscaping in your yard or you would really like to knock down the wall in between your kitchen and the dining room, but you know that projects like these can cost quite a bit of money especially if you have to contract all the work out because you are not able to do it yourself. While there is certainly something to be said for having a home that is visually appealing to you, it is important to take a step back and look at the overall financial picture before you start shelling out money to make the changes you want.

In fact, it does not matter if you have the cash to make these improvements or if you are going to wind up using credit to cover the costs; improvements to your home are investments, so you want to make sure that these investments will yield the return you are looking for.

Of course, making some necessary improvements are important, such as replacing a faulty furnace or repairing a cracked foundation. It is the optional big improvements -such as the pebbled driveway or the addition to your deck- that you need to analyze before deciding to go ahead.

There are certain times when it does not make a lot of sense to pay for big (optional) improvements in your home:

You are going to sell the home within the next year or two. Rarely will you get a return on the money you put into a big project around your home. Find other ways to make your home appealing instead of major renovations.

You can’t afford the project. It is one thing to finance a new washing machine when the one you have starts spurting water all over the floor and cannot be fixed, but it is another thing entirely to finance a complete kitchen remodel.

You are likely to change your mind. Suppose you really fell in love with granite countertops, so you pay to have all your kitchen countertops redone with granite. A year or two later, you notice that everyone else has granite countertops so now you want to redo the kitchen all over again. If this sounds like you, it may be better to simply accept the looks of your home for now so you don’t go broke from keeping up with all the latest design trends.

There is nothing wrong with paying for unnecessary improvements to your home in an attempt to make it a more appealing place for you to live in, but you should only take on these optional expenses when you can afford to do so and when you know that you will be able to enjoy the improvements for the years to come.

Being a parent can be an expensive position. Even if you budget your money very carefully, it may seem like your money always seems to disappear from your wallet just as quickly as it appeared, and much faster than it ever did before you had children. Whether you’re buying diapers and formula for your infant or paying for your teenager’s music lessons, it may seem as though the costs associated with raising children just get higher and higher no matter what you do. 

The trick is to learn to manage your money while also teaching your children about the value of a dollar. Obviously you won’t introduce this concept to a newborn, but once your child reaches a certain age, he or she should be let in on what is going on with the family finances. How do Mommy and Daddy make money? What kind of bills do they have to pay? How much money should they be saving? These are all concepts that your child can benefit greatly from learning as early as possible.

The great thing about having little students hang on your every word about personal finances is that you may be more inclined to get it right. You’re accountable for what you do with your money when you use it as a basis for teaching your kids about how to someday handle their money, so if you have always had trouble with managing your money perhaps now is the time to get it all under control.

Here are some things to remember about being a parent while also managing your personal finances effectively:

1. Young kids don’t care who made their clothes or toys. While you may encounter a desire for certain brands when your children get a little older (and start getting influenced by other kids and the media), don’t bother buying the expensive labels for a baby or young child. Instead, put the extra money you would have spent into a college fund or use it to pay down some of your debt.
2. Secondhand is great. As long as the item you receive secondhand isn’t unsafe, embrace the opportunity to spend less on the things you kids need, or maybe receive these items absolutely free from parents who no longer need them. 
3. Don’t go into debt to buy things you don’t need. It may seem like a remedial concept, but plenty of parents are guilty of whipping out a credit card to pay for ballet classes or football leagues even though they know they probably shouldn’t spend the money. While you want your child to be well-rounded and to have fun, do you want your child to have to provide for you when you’re older because you fell deeply into debt early on?
4. There is free stuff out there. Check out the educational programs available at your local library, or take a stroll through a city park instead of heading to an attraction that costs money. The sooner your kids can learn that entertainment doesn’t always have to cost money, the better.
5. Don’t forget to save! Don’t just save for your child’s college education; save for your retirement as well! Remember: There are no scholarships for retirement.

This is certainly not to say that you can avoid all the extra expenses that come with being a parent, but if you watch your spending and save for the future you may not have to move into your kid’s basement when you hit retirement age. 

You already know you’re supposed to stay up to date with your checkbook register so you can keep a handle on what your money is doing, but if you are like most people there are some weeks (or months) when you just can’t manage to scrutinize every charge and reconcile your bank statement to the dime. Whether or not you actually know what your accurate checking account balance is, you should still make the time to review your transactions to make sure that nothing is happening with your account that you didn’t realize was happening.

Why should you take the time to do this even if you aren’t managing to stay up on your checkbook register? The sooner you catch a problem with your checking account the better, especially considering there are some limits as to how long you have to report a problem where your financial institution will actually assist you. In other words, if you contact your bank to complain about a charge you don’t recognize for a couple hundred dollars - but the transaction took place over a year ago and you’re just now noticing it - you are simply not going to get the help and cooperation you might expect if you call to ask about the same transaction a couple of weeks after it occurs.

Here are the four charges that are notorious for draining your checking account that you may not even notice if you don’t review your account transactions regularly:

Things you thought you cancelled. Whether it’s a magazine subscription that automatically renews every year or an anti-virus program that you didn’t know you had to cancel in writing, once you give a company the authorization to debit money directly from your checking account for goods or services, there is a good chance they will keep doing it until you tell them to stop.

Fees you didn’t realize you have to pay. Every financial institution has some fees they charge, but sometimes the fees seem to come out of nowhere and you don’t even know to look for them on your statement. For example, while you probably expect to pay a fee if you bounce a check, you may not realize that you have to pay a fee to get a replacement debit card.

Errors from your financial institution. Even if your financial institution relies heavily on computer software programs for account information (as nearly every financial institution does) this does not mean that the computer systems are infallible. Errors happen, and unless you can catch the error early you may wind up unknowingly paying for something that actually has nothing to do with you.

Someone taking money out of your account. A thief who somehow gained access to your personal information may start small when taking money out of your account just to see if you will even notice. It may start with a $20 purchase at a grocery store, but then a week later when the thief discovers that the account information is still valid and accessible the real spending will begin. You’re not immune to someone stealing your personal information, so just like you’re supposed to periodically review your credit report to make sure nobody is using your personal information, you should also review your account transactions regularly.

You can avoid a lot of problems by regularly reviewing your checking account transactions. If you aren’t already utilizing your financial institution’s online banking program, now is the time to start. Don’t let your money disappear from your account.