March 2021 Personal Finance Q&A
A few weeks ago, I posted on social media and asked what questions you had about personal finance that you would like me to answer. So, let’s jump right in.
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My husband and I live on last month’s income, and we save the amount that it would take for us to live for one month.
This number is the amount of money that we save to be one month ahead. We save $3,500 every month, and it covers all of our expenses.
We also have a few savings, sinking funds, and goals added into that amount as well.
So, the answer to the question is the amount of money that will take you to live for a month.
If you’re looking for a few ways to speed up the process of getting ahead on your expenses, be sure to check out this post for tips to get a month ahead.
The answer to this question is simple. Put the money from your stimulus check wherever it needs to go for your family and your situation.
I talk a lot about living the life that you love on your current budget, and that’s exactly what I want you to do.
Don’t let people pressure you into putting your stimulus check towards starting a business, paying down debt, or saving if that’s not what you want to do with your stimulus check.
This is money that is supposed to help you out and stimulate the economy.
Whatever makes sense for your family, that’s what you’re supposed to do with your stimulus check. Don’t let anybody make you feel bad about the choice that you make.
I love this question. I think budgets are personal and flexible. I think they provide a certain level of security to your finances.
The most valuable part of a budget to me is financial awareness. So, whether you make enough money or not, if you use a budget, you know exactly how much money you have to go towards your expenses.
You know that your expenses are covered if you have enough money, and if you don’t have enough money, you’re aware of that as well.
Budgets bring that awareness, and they make sure that you are on top of your finances and know where your money is going.
Check out this post to create your first budget today.
I’m going to answer this question from a personal standpoint. The answer for me is I got a month ahead before I started my debt-free journey.
The first reason is that I was using YNAB, and they have four rules that they like you to follow for their program. One of those rules is to live on last month’s income.
The second reason is that I was getting paid once per month on the last day of every month.
My pay date put me a month ahead before I got started, but YNAB gave me that push to actually figure out how much my expenses are for the month.
It is possible to be a month ahead and still pay off debt. I would recommend getting a month ahead as soon as possible.
It will be so easy to budget for the whole month and not have to worry about it.
Budgeting should be at the top of your priority list whether you are trying to start up a business or not.
Your budget is so essential to your financial wellness.
If you are in the process of trying to start a business and you have debt, my suggestion is to use a budget for your bills and expenses.
Once you’ve done that, create a separate budget for your business startup expenses.
If possible, get a side hustle or another form of income to fund your startup business.
This will help you avoid going into more debt while trying to start something you’re passionate about.
My husband and I just bought a house in May. There are a few things that we took into consideration when making this decision.
In 2019, we made a goal that we were going to purchase a house in 2020. We didn’t anticipate the pandemic, but we did consider that when we were making our decision to buy the house.
To answer the question, make a pros and cons list.
There are a few good reasons to continue to rent. You’re able to save your money, and you don’t have to pay for costly repairs and maintenance.
On the other hand, purchasing a house gives you the freedom to do what you want to do with the property. Your money is also building equity into something that you will eventually own.
The bad part about purchasing a house is you are responsible for all maintenance and repairs. It also comes with property taxes and other fees.
The factors that you need to pay attention to are personal.
Do you have the money to put a down payment? Are you prepared to pay a PMI, private mortgage insurance if you don’t have 20% to put down?
Do you have money to pay for a new roof or pipes if they burst?
Those are just a few things to look out for when deciding whether to rent or to buy. Make sure you consider everything before you make a decision.
I use YNAB. YNAB is so helpful for sinking funds because you can have as many categories in your budget as you need.
Those categories can stand for anything that makes sense for you. The best part is you keep your money in your regular checking account.
YNAB is not free, but you can get a free 34-day trial to try it out. If you like it, then you can move into a paid plan.
Check out this post for a step-by-step guide to set up your budget in YNAB.
As far as free options, you can use cash envelopes to save your cash.
If you’re not comfortable saving cash, there is a free app called Qube. Qube is a bank account and budget in one.
Another option would be to open a checking account at a bank like Ally to have different buckets or sinking funds within your account.
That’s all the questions that I got. Leave a comment below with any questions that you would like me to answer for the next Q&A.