Wednesday, August 27, 2008

10 No-Budget Budget Tips from the Frugal Bunny!

I don't have a budget. I've tried a few times, but it feels to hindering and I never follow through on it after a while. But knowing my own personality, I do things to help me save money, and then save money. This may not work for everyone, but hopefully this will help people with a similar personality as I do, and/or inspire others to look into their own personality and develop their own little frugal tricks!

NOTE: Because of my career as an independent contractor (I'm a tattoo artist), I have to handle my money a little differently than most people, so some of my habits have evolved through that. BUT I hope it still inspires others to make their own system...

1. No matter what, I always put 20% of my weekly paycheck into my savings account. No exceptions.
I developed this habit when I came out of my apprenticeship and became a full-blown professional tattoo artist (independent contractor). For the moment, I pay my taxes all at once, once a year. Most of you have the convenience of your tax money taken out of your paycheck for you. Because I don't have that luxury, I had to take care of it on my own, so I made this system. That way, when tax season comes, I won't be worried about having to fork out a huge chunk of money and not having it! After paying taxes, whatever I have left over, I split into 3 categories - fun money (a reward for 12 months of disciplined savings), Roth IRA money, and money to just keep in my savings account.

2. Open an Orange Account with ING Direct.
Speaking of savings, this is something I JUST started. This gem of advice was given to me last week, by my friend/financial advisor/client, Ellen Coleman from Resource Horizons. This is a convenient way to put your savings into an account with a much higher interest rate. Right now, ING Direct's APR is at 3%. My bank only gives my like 0.01%. I earn about a dollar and some small change per month at the bank, while at ING, I earn about $16. That's a big difference, yo! So if you're going to sit on your money, you might as well earn a little more than what your stingy bank gives you, right? Check it out!

3. Open a Roth IRA.
Again, because of my job, I don't get a 401K like most people. I have to handle all that by myself. So for now, I figured a Roth IRA would be a good start to insuring my retirement will not put me into a cardboard box on the street. Depending on which kind you choose (let your friendly neighborhood financial advisor explain things and help you choose the kind that best fits your lifestyle), they can be tax-free or tax-deductible. Roth IRAs are less risky than playing stocks and bonds, and are the best kind for long-term savings/investments. I encourage all people, but especially young people, to open one.

4. Write down your monthly bills.
You'll see a pattern of seasonal ups and downs, and will help you prepare for what you need to fork out each month on essentials - like mortgage, utilities, cell phone bills, etc. Knowing what you need to pay for at what times of the year will help you lay out the rest of that no-budget budget. I also right down my weekly earnings, since it fluctuates seasonally in my kind of job. This also helps me lay out the my no-budget budget.

5.Give yourself a weekly allowance - and stick to it.
Each week when I get paid, I give myself an allowance in cash. This is money I use for the week (mainly my days off) for groceries and leisure activities. If there's something I need to buy, like a ladder or toilet paper, I also keep that in mind when I give myself the allowance. Anything left over from a usual week, I put the cash away for when I need to buy that ladder or toilet paper. I call this microsaving.

6.Only use a credit card if you know you can pay it off in X amount of time.
I use a credit card for when I purchase supplies for work, when I travel, or buy big things, like computer software. All these things I write off in my taxes, too. Anyway, only use it when I know I can pay it off when the bill comes in IN FULL. For larger purchases, I tell myself to pay it off in x amount of months, as a goal. This way, I won't get into credit card trouble! You must know yourself enough to do this. You have to be able to keep your own promises to yourself. If you can't trust yourself, who can you trust?

7.Save your receipts!
Again, because I'm an independent contractor, I get to do business write-offs. Do some research and see what you can write off. And then DO IT! If you have lunch with a friend or a group, and you talk about your business once, it's a tax write-off. If there's a pair of jeans you only wear to work because you know you'll get ink stains on them, it's a tax write-off (as work uniform). If you get that Wacom tablet you've always wanted so you can use it make more artwork, it's a tax write-off. If you fly somewhere to do a guest spot at tattoo studio, your plane ticket and other expenses are a tax write-off. If you buy white-out, it's a tax write-off. Your mileage to work or work-related places is a tax write-off. That album you bought from iTunes, so you can listen to it at work - it's a tax write-off. Okay, so these examples are from my own job. But you get the drift - the amount of time and effort you take to find out what YOU can write off is worth every penny you save on taxes!!!!!

8.Don't put all your eggs in one basket.
Spread your money out. That way, if one fund runs out for whatever reason, you have a backup or two or three. For example, I've kept my bank accounts from Minnesota, and I put a little in there for safe-keeping and emergencies. My main bank account here in Georgia, is the one I use to pay my mortgage and bills. Then I've got my ING account, my Roth account, a safe deposit box full of cash for other emergencies and/or savings goals for things I want, and my weekly allowance. Yes, it seems like I'm spreading myself too thin. But with patience and discipline, I do eventually get the things I want, and I can pay it in full, instead of going into debt like most Americans do.

9.Live Well Within - If Not Below - Your Means.
Too many Americans don't do this, which is why we're in such financial debt. If you live simply and cost-efficiently, you can still have style and comfort without having that debt. I hate seeing people who have these crazy expensive cars, but only have like two dollars in their bank accounts. They are living BEYOND their means, and are in horrible debt - all for what? To look cool? To impress the ladies? It's not worth it to me! I don't like buying STUFF. In fact, the less stuff I have, the more mentally happy I feel. I often go through my crap and always find things to give to Goodwill (ooh, another great tax write-off!). When digital TV starts next year and my rabbit ears will be useless, I'm going to throw out (okay, give to Goodwill) my television. When I have less clutter in my home or work station, it makes me feel like there's less clutter in my mind, too. And when there's something I want, I save up for it so I can buy it without debt. Yes, it takes time, but the rewards are worth it in the end. The simple life is a happy life.

10.To Save Money, Give It Away.
Yes, I said that right. Giving to charities and non-profit organizations is a tax write-off. To go even further, you can volunteer, and your travel/commuting expenses can be written off, as well! The more you give to the causes you believe in, the less money you have to give to Uncle Sam. So you not only save money on taxes, and not only do you feel good giving to good causes, but you also are empowered by the fact that you're taking control over your world and helping shape your community.

~Jenny Bunns!

1 comment:

alterna180 said...

jenny, i just want to say you're amazing! i am subscribing now.