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New Tools for the New Year: Money

New Tools for the New Year: Money

    Money can be a tricky issue for many people, especially in the last few years when we have had record high unemployment rates and difficulty making ends meet. As you get ready for the new year, you can prepare yourself with some new tools that can make 2012 one of the best years for managing your money.

    YNAB

    I started to get serious about my money situation about halfway through 2011 when I stumbled on one of the single best money management / budgeting apps around: You Need a Budget. We have actually had the founder and creator of YNAB featured here at Lifehack in the past.

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    YNAB is a piece of software (that works on Mac or Windows) where you setup your accounts and start to budget the money that you have during the month. It’s sort of like making buckets for things that you have to pay during the month and then sticking to them.

    The whole idea though with YNAB, rather than just following a simple budget, is to build up your “YNAB Buffer” where you will use it to eventually pay next month’s bills with this month’s money. This “Buffer” allows you to not get into the “not-enough-money-at-the-end-of-the-month” phenomena and helps relieve a bunch of tension in your life, especially if you have been struggling with keeping track of your money. It took me about 4 months to get my “YNAB Buffer” setup, and I will tell you, the stress and pain of worrying about where my money for this month’s bills is going to be is gone because they were payed with last month’s money.

    YNAB also has apps for iOS and Android to track what you have spent on the go.

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    Credit Cards with rewards

    I wouldn’t say that I am a credit card connoisseur by any means, as I do believe that credit cards can get you into some serious trouble if you are not responsible with them, but they can be appealing if you pay them off every month and use them appropriately. The three cards that I can recommend from personal experience are:

    The APR on these cards are pretty darn high, but as long as you pay off your balance before you get hit with the rates at the end of your month cycle, you can get some great cash back rewards when purchasing a good amount of gas or even ordering things on Amazon during certain times. Keep a look out for other cards that offer some sort of reward that is applicable to you to help you save a little bit of money here and there on things you already purchase.

    Envelope System

    If YNAB is a little too technical for you, there is also a tried-and-true-system that is a lot like it. I have seen this technique in many different places, and I’m not exactly sure who to credit it too, but the-get-out-of-debt guru Dave Ramsey has surely made it popular on his radio broadcast: The Envelope System.

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    At it’s core, The Envelope System requires you to take your paycheck, figure out how much money need to goes to what category (to food, clothing, rent, cable, etc.), create a separate envelope for each category, put the cash in the envelope, and only spend that cash. Sounds simple, hmm? Think again.

    The Envelope System is truly powerful, but only if you can stick to it which is tough to do because budgeting is tough to do. I much prefer the YNAB system to this one, but if you can only live paycheck to paycheck until you get out of debt or make more money, then The Envelope System is probably your best bet.

    Common sense

    Ahh, yes. A little common sense can go a long way when it comes to money. Here are some things to follow. Some of them were new to me this year while some are things that I need to be aware this coming year:

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    • Don’t spend more than you make
    • Create a budget and stick to it
    • Try to find a way to make more money rather than cut out every last expense that you have
    • Try giving money away to charity or a cause every month
    • Start saving money for the future today
    • Read a good money book like I Will Teach You to Be Rich
    • Don’t use a credit cards unless you can pay off the entire balance by the end of the month

    Conclusion

    Like I said above, managing your money comes down to making smart decisions (saving for the future) and avoiding bad ones (like not paying off your credit cards). If this year you budget your money correctly, save, and make smart decisions with how you spend, hopefully your money will be controlled by you rather than you controlled by it.

    (Photo credit: 3D illustration of dollar from Shutterstock

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    CM Smith

    A technologist and writer who shares advice on personal productivity, creativity and how to use technology to get things done.

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    Last Updated on March 29, 2021

    Life Insurance: A Secure Way To Protect Your Future.

    Life Insurance: A Secure Way To Protect Your Future.

    Life is a journey full of ups and downs. No one can actually predict what might happen the next moment; there are times where the happiest moments do not even take a second to turn into the gravest. Planning for your future can help you face such unwelcomed but irrepressible situations with much ease. We all want to make every memorable event of our life more special and to cherish all those moments happily and worry less, you must financially plan your future. But no one has control over life and death. Who would wish to see his family suffer in his absence? Insurance hands over the financial jeopardy of life’s happenings to an insurance company.

    Importance of getting a life insurance

    No one has control over life and death. Nobody would like to see their family suffering in an absence, and that’s why many people recommend life insurance. A life insurance plan is one of the best ways to secure the future of your family, even against those financial troubles after an untimely demise. These plans are safe and credible, and you could trust them for your family’s better future.

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    On the other hand, a life insurance policy is a contract between a company (insurance provider) and policyholder in which the insurance provider ensures to pay a certain amount of money to the nominated beneficiary in case of the policyholder’s death during the term of the agreement. There are different types of insurance plans, and it is important for you to know the benefits of those plans such as a funeral, medical or some life expenses provided they are mentioned in the agreement.

    Choosing the right insurance plan

    If you’re about to select an insurance plan, you should consider some important factors:

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    • The time at which you start investing in a program and the number of family members you want to get insured. Obviously, a married man with two children has different needs compared to a single one. The number of persons who are dependent on an individual also varies from person to person.
    • The next thing you need to consider is you and your family needs. What are your child’s dream, your retirement plans, for how long would your dependents need financial support, any personal injury, etc. And do not forget those events or situations that will surely demand a huge sum of money.
    • The next thing one must consider is your current income. You should preferably choose a plan which you can afford.

    Now you must be having a pretty clear idea of how to choose the best plan for you. Further, you should also compare various plans offered by different companies and numerous sites available online that help will you to compare them.

    Differences between life insurance plans

    Here’s a short brief of some plan categories you can choose according to your needs:

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    • Term Insurance Plan – You have to pay once, and your nominee gets the paid money under your misfortune demise. It ensures a person for a fixed time. If you survive the policy period, you do not get your premiums back.
    • Whole Life Policy – This plan continues for your lifetime. Under this, the policyholder has to pay regular premiums, until their death.
    • Endowment Policy –  In case the individual dies during the tenure, the beneficiary gets the amount assured. If the person survives the policy tenure, they gets back the premiums paid with other investment returns along with several other benefits.
    • Money Back Policy – In this a portion of the money invested is returned to the investor at regular intervals. If you survive the insurance term you get the entire amount back; else the beneficiary receives the entire sum assured.
    • ULIPs – These are the life insurance plans that offer you future security plus wealth creation options.

    Many people do not opt for whole life policy and endowment policy because of the high amount of money you need to pay, while others may prefer to opt for these if they have a high life expectancy. Surely you will find the best one for you.

    So what are you waiting for? Plan for your future and live a happier and carefree life today.

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    Featured photo credit: aryehsampson.com via aryehsampson.com

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