Your Go-To Guide to Saving Money

Financial freedom is a topic that many people discuss but few are able to achieve. When talking about financial success, most people talk about investing or running a business that will quickly produce enough income to last a lifetime.

While it is true that investing and entrepreneurship are valid paths towards achieving financial freedom, the problem is that these two activities are often talked about in unrealistic terms.

Success in business and investing requires adequate money management, which is an intrinsic aspect of personal finance that you should have learned about in your younger years.

Money management is at the heart of “Your Go-To Guide to Saving Money.” This guide tackles several topics related to effective money management, from making extra money to keeping a budget and from teaching children about personal finance to running a business in financially responsible fashion.

Managing your money is more than simply being able to balance your checkbook.

In a consumer society, money management is not as straightforward as you may think; the basics that you will learn in this guide will also require considerable discipline and willpower in the beginning.

Discover how much better your life can be once you apply principles of money management.

If you practice efficient money management, you will not only see the results in your bank account but also in your personal well-being, job performance, relationships, and other facets of your life.

Here’s what we will talk about in this guide:

1. The Effects of Financial Stress
2. Personal Financial Planning
3. Residential Options
4. Financial Education
5. Frugal Families
6. Technology for Money Management
7. How to Make Extra Income
8. Starting a Business
9. Expense Tracking

Financial Stress

How It Affects Your Quality of Life?

In February 2016, the Journal of Psychological Science published a longitudinal study conducted by University of Virginia researchers; more than 33,000 American households participated in a series of polls and thought experiments to determine the nexus between financial stress and physical pain.

The research team found that the mere thought of financial insecurity amplified the feelings of pain.

Furthermore, researchers linked prolonged episodes of financial stress with a propensity to seek powerful painkillers.

Many mistakenly believe that you can wash away financial stress by telling yourself that “it’s all in the mind” but it isn’t, and the aforementioned study is proof of that.

Financial stress is a destructive force that triggers your fight-or-flight response, the very same response that is triggered when you are experiencing fear. Think of your body as a battlefield invaded by financial stress; your brain is a general issuing orders to your adrenal and pituitary glands to mobilize two very powerful hormones to fight – adrenaline and cortisol.

They require a physical response in form of flight or fight, as this brings their levels back to normal.

If hormones do not have that release, they stay elevated and wreak havoc in the body.

Since financial stress is often comprised of a series of prolonged events, the constant state of fight-or-flight without release will take a toll on your health.

You want to turn things around, but that is not an easy thing to do when you are suffering from insomnia, migraines, weight fluctuations, high blood pressure, psoriasis outbreaks, and even early diabetes; these are physiological effects of financial stress as recognized by the American Psychological Association.

When it comes to the impact that financial stress has on your psyche, the consequences are certainly worrisome.

Emotional and Behavioral Effects of Financial Stress

Depending on how you channel the hormonal waves generated by your fight-or-flight response, one of your first behavioral responses will be related to alienation. This is a classic flight response that will make you avoid potentially unpleasant situations such as picking up the phone when debt collectors call.

You may also alienate yourself from your co-workers, friends, and relatives.

Depression and anxiety go hand-in-hand with financial stress; these are reactions to feelings of hopelessness, inadequacy, and overall low self-esteem. Depression is a debilitating state of despondency that can cripple your daily life.

Anxiety is a condition that keeps you on edge as you negatively anticipate further misfortune in your life; once you are afflicted by this condition, you may experience panic attacks, which are largely physical.

A panic attack has a single emotional effect, which is fear; all other symptoms are physiological as you start sweating, trembling, feeling nauseous, choking, suffering chest pains, and more.

In addition to alienation, depression, and anxiety, your cognitive function will falter as your behavior becomes erratic. Many people deal with financial stress in the worst possible ways, by drinking too much, self-medicating and eating in excess.

As proof that financial stress is one of the most difficult situations people are likely to face, consider the results of a survey conducted by Payoff, an online provider of personal loans: 23 percent of respondents whose lives have been impacted by financial stress suffered from symptoms consistent with post-traumatic stress disorder.

How to Deal with Financial Stress?

Learning about the poor effects of financial stress is of no comfort to anyone going through money trouble, but it is imperative to understand that this is something that can happen to anyone.

The late Steve Jobs mentioned that he never personally suffered from financial stress because he did not have any money to worry about as a young man backpacking through India; years later, his considerable wealth prevented him from worrying too much.

Jobs was an outlier who perhaps did not have to concern himself with financial literacy and money management, two strategies that can help you cope with financial stress by preventing it from happening in the first place.

Money management revolves around concepts of budgeting, saving and investing.

Learning to properly manage your money is an essential part of life.

On one hand, if you blindly spend your paycheck and rack up credit card debt without thinking about what could happen if your income is suddenly cut off, you will certainly suffer financial stress; on the other hand, if you budget accordingly and keep a three-month cash reserve, you will be prepared to deal with unpleasant surprises and financial stress.

Financial literacy is the knowledge and understanding of how money works on a microeconomic level; it is about knowing about the actions and choices that can lead you to enjoy financial peace of mind.

Although you are never too old to learn about financial literacy, this is a topic that should be taught at an early age.

The link between financial literacy and money management is what will allow you to break free from the clutches of financial stress.

There are seven aspects of this link that you should know about.

Finding Your Financial Persona

First of all, you should understand the type of financial personality that dictates how your style of spending, saving and investing:

• Big Spender: This is when you constantly enjoy having the latest, greatest and shiniest. As a big spender, getting into debt and taking on risky investment is part of life.
• Saver: You are conservative and frugal. You derive more satisfaction from seeing a nice bottom line in your bank statement than from reading about major deals on the Wall Street Journal.
• Shopper: You are more active than a big spender, but you are also smarter about shopping around and getting the best deals. You prefer short-term investments that you can cash out of very rapidly.
• Debtor: You manage multiple credit cards and loans to support your lifestyle, which does not have to be flashy. Savings and investments are things you would like to explore if you could cut down on your debt.
• Investor: You are financially literate and understand that money will never grow on trees. As long as you apply good money management strategies and avoid unnecessary risks, you will not experience financial stress when the markets turn against you

Be Patient: These Things Take Time

Patience is more than a virtue in the world of financial literacy and money management; it is a necessity. It may take years for you to become debt-free, and it may take a few more to become financially independent.

You will be able to see your progress from one month to the other, but you may also experience occasional setbacks. What is important is that you stay on course, be confident, and remain patient.

Question Your Expenses

Do you really need to spend every dollar you earn?

You may feel financially secure at this point in your life, but only a budget will determine whether you will be able to handle financial stress.

Your financial literacy journey should start with budgeting lessons; this is something that you can manage with various apps that link to your bank account and even provide you with a credit score, but you can also get started with pen and paper or a simple spreadsheet.

Always Think Ahead

Planning for the future should become a principle of your financial life.

You will quickly learn that a three-month reserve cushion made up of all your household expenses is one of the best ways to keep financial stress at bay.

Don’t stop with this cushion; think about upcoming vehicle registration, scheduled maintenance, family vacations, and other future expenses.

Become a Smart Investor

You may think that investing is not for you; however, this assumption will quickly dissipate once you learn the basics.

You do not have to work on Wall Street to understand investments; you can safely get started with a college fund for your children before you get into other instruments such as 401(k) plans and mutual funds.

Learn to Understand, Communicate, and Compromise

Once you start budgeting, you cannot afford to stop. You may feel pressure from friends and relatives who may inadvertently push you into spending outside of your budget; when this happens, you have to be prepared to compromise.

Instead of taking the family to the movie theater, you can always stay home, make a nice meal, and enjoy a few selections on Netflix.

You will likely have to communicate with your friends and family about your financial goals, and you may need to remind them about this more than once.

Invest in Your Health

Relaxation and exercise also play an important part of your financial life. If you neglect to do your best to stay healthy, monetary woes are bound to affect you more than you expect.

Healthy habits can begin with relaxation and light yoga; once you start feeling more flexible, you can move on to some advanced poses.

To this end, smartphone apps such as Pacifica, Mindfulness, and Pocket Yoga can guide you and let you track your progress.

Relaxation can also help you condition your brain so that you eliminate negative thought patterns that may hinder your financial education process.

Making physical activity part of your entertainment routine will also help you save money; since activities such as hiking, bike riding, and team sports tend to be more affordable than choosing dinner and movie every week.

In the end, financial stress is something that you do not want in your life; with financial literacy and proper money management, you will be able to effectively recover from monetary woes and learn how to avoid financial stress altogether.

Personal Financial Planning

A 2015 survey conducted by Bankrate.com revealed that more than half of all Americans are certain that a setback such as a medical emergency, a flooded home or even a month without a paycheck would completely wipe them out.

What is amazing about this survey is that most respondents reported that they followed a financial plan, although 20 percent of these individuals admitted that their plan was not written down.

Financial planning is not just for the rich and famous. As the aforementioned survey revealed, quite a few Americans follow a financial plan, but it may not be realistically drafted or executed.

Making plans is for everyone; even if you consider your situation to be privileged, you still need to formulate an adequate plan so that you do not fall into money troubles and financial stress.

Benefits of Proper Financial Planning

If you need to become familiar with the advantages of financial planning, here are five points to ponder.

1. With a good financial plan, you will always be able to ascertain your money situation at any time.
2. As long as you keep your goals within a realistic perspective, you should be able to reach them within the parameters of your plan.
3. Keeping spending under control is virtually impossible without a financial plan.
4. Clear visualization of progress is one of the most important aspects of financial planning. If you want to experience financial satisfaction, wait until you see your cash reserves grow to three months’ worth of household expenses and still have some free cash to celebrate with dinner at your favorite restaurant.
5. When it comes to personal finance, confidence is not so much a trait as it is a state of mind that you can actually achieve with proper planning.

There is no question that the Great Recession of a few years ago left many Americans in precarious financial situations. This may very well have happened to you; nonetheless, you should not think of financial planning as merely being a strategy to avoid disaster.

Think of a financial plan as a trusty roadmap that you can follow to reach certain destinations in life; think about early retirement, college money for your children, or even a long and well-deserved vacation in Costa Rica.

With the above in mind, here are the six steps you should follow when you set out to create your personal financial plan.

Evaluating Your Financial Situation

When setting out to evaluate your current financial situation, you should start with a little bit of looking towards the future.

Where would you want to be in terms of personal finance in a few years?

What do you think needs to be done for you to get there?

You do not have to provide clear answers at this time; however, you should keep these two questions in mind as you progress through your evaluation.

Young families and single professionals will benefit the most from early planning, but it is never too late to begin even though it is generally better to get an early start, particularly with regard to picking investments.

Determination of net worth is the first step; this involves sitting down to list all your assets and liabilities. You can search online for net worth worksheets and calculator apps to help you accomplish this first step.

Here is a quick rundown of what you will be listing:

Assets, Property, and Investments

• Cash
• Bank account balances
• Life insurance cash value
• Money that others owe you
• Equity in real estate you hold
• All furniture
• Personal property
• Vehicles
• Valuable items such as jewelry
• Stocks and bonds
• Retirement plans

Debts and Liabilities

• Mortgages
• Credit cards
• Car loans
• Insurance payments
• Property taxes
• Monthly household bills
• Student loans
• Judgments against you
• Outstanding fines

Subtracting the total assets from your total liabilities will reveal your net worth.

Setting Financial Goals

For this step, you should give yourself some room to daydream. You must not leave out any goals; however, they should be S.M.A.R.T. (Specific, Measurable, Attainable, Realistic, and Time-based).

Another aspect of S.M.A.R.T. goals is that they should be classified into:

• short-term – within 12 months
• mid-term – between one and 10 years
• long-term – more than 10 years

An example of short-term could be to set aside $100 per month, while a mid-term goal would be to pay off all your credit card debt. A long-term goal could be paying off your student loans or building a stock portfolio.

Staying within the S.M.A.R.T. parameters, each goal should have a target date, a monthly cost and a definition of whether the goal is a need or a desire.

When it comes down to prioritizing your goals, paying off debts and building cash reserves should come before your desires or future purchases.

The reality of this step is that you will not be able to allocate funds for all your goals at once, which is why you need to prioritize.

Strategies and Courses of Action

This step serves to identify the actions that you may be able to take for the purpose of helping you achieve your goals; to this effect, here’s what main courses of action may include.

Fund Allocation

For most Americans, cutting down on spending would be a very effective course of action; however, this will require making choices that may appear harsh on the surface, particularly for young families that have gotten accustomed to certain comforts.

In 2016, a study by USA Today estimated that many college students spent as much as $21 each week at Starbucks, which translates into more than $1,000 per year.

This single expense could be allocated to pay down credit card debts.

Imagine how much you could save by cutting down on premium cable channels and taking the family out to dinner and a movie every weekend.

Acquiring More Income

If you are not able to get a better job or work extra hours, you or members of your household may have to seek part-time income.

When you combine additional income with cost-cutting strategies, the previous step of setting actionable goals becomes a lot easier, particularly if they are short-term goals such as building up a three-month cash reserve cushion.

Aggressive Investments

You have to be careful with this one; you do not want to put all your money on Bitcoin just because the digital currency is going through a bubble period.

Such a move would be irrational instead of aggressive.

What you really want to do is to learn about safe investment such as savings bonds and index mutual funds that you can allocate more money into for the purpose of reaching financial goals.

Budgeting

On the surface, budgeting may seem easy because it is often taught in high school; in reality, it is more complex than you think.

Fortunately, most banks offer budgeting tools as part of their online banking services, and there is no shortage of apps that you can install for this purpose.

There are two main components of budgeting:

1. Expense Tracking – If your smartphone is set up as a digital wallet linked to your bank account, this budgeting component is easy.
   You want to be detailed about your spending, and you really want to visualize the data you input.
   You can also do this on spreadsheets, but dedicated apps tend to be more useful.
2. Making Adjustments – It is easier to cut costs once you are able to visualize how much you are spending.
   If you see that a certain credit card has a rate of interest that makes it appear as high ticket item on your budget, you should stop using it and turn it into a short-term goal to pay it off.

Sticking to Your Financial Plan

You have reached an executable portion of your planning, a step that will be more difficult than the previous ones. With this step, reality sets in as you make decisions that go beyond looking at the big picture.

Once again, be sure to focus on eliminating those expenses that really need to go (like Starbucks); you should also set deadlines that match your target dates and gain inspiration from looking at the incremental progress you are making.

Give Yourself Room for Revisions

If you are budgeting correctly, you will be able to see how your plan is developing on a weekly basis.

Once you reach your first month, you should take time to review your calculations, estimates, projections, costs, and target dates.

You may need to rearrange your goals in terms of priority; perhaps you realize that the housing market is not looking good for the rest of the year, and thus this may not be the best time to save up for a down payment.

In such cases, you can adjust your fund allocation and shuffle your goals so that put your money to good use.

Housing Options

If you are like most homeowners or tenants, you have an idea of how much money goes into your dwelling.

Mortgages, rental fees, insurance, taxes, and monthly utilities are the usual suspects of household expenses, but you would be surprised to learn about the many hidden expenses in your home that can deplete your budget.

You may also be surprised to learn that owning a home is not always a superior financial practice compared to renting.

There are quite a few money-saving practices that you can incorporate into your household so that it becomes one of the least burdensome parts of your budget.

Making Residential Decisions

If you intend to leave your current home for the purpose of moving into a more affordable dwelling, you must sit down and make a plan that really makes sense for your financial situation.

The first consideration in this plan is to settle the eternal debate of signing a purchase contract versus signing a lease agreement.

To Buy or To Rent?

There is a single financial aspect to consider in this regard, and it is an economic principle known as market equilibrium. Homeownership by means of carrying a mortgage has many economic incentives, but it is rarely cheaper than renting.

Depending on certain market conditions, the value of a residential lease contract should be about the same as paying for a mortgage with all its mandatory escrow items and maintenance.

Rent and mortgage payments are components of the housing market and are thus affected by the forces of supply, demand, and speculation.

The factors of happiness and quality of life should also be considered; as such, if your family is happy renting a home in a wholesome community, there is no reason why you should listen to financial news commentators who tell you that you are missing out on the housing market.

The economic equilibrium of the real estate market should be part of your reality; given the high cost of residential properties in the United States, there is a strong chance that you could make mortgage payments for the rest of your life.

This is something you should incorporate into your financial planning.

Preparing to Buy a Home

If you do choose to purchase a property for the purpose of building equity, you should be thoroughly prepared to run with all the costs and expenses associated with real estate acquisitions.

You will need a special budget that includes the following items:

• Cash reserves – Once your mortgage broker discloses the amount of the monthly payments you will be making to the bank, you should add other costs such as utilities, groceries, household products, tuition, and transportation costs.
  You should not attempt to buy a house unless you have saved up at least three months of cash reserves.
• Maintenance and repairs – Find out what the most expensive and immediate repair would be in your house. If you live in South Florida, for example, figure out how much it would cost to replace your air conditioning unit.
  If you live in northern Vermont, inquire about the cost of a new furnace installation.
  In addition to your reserves, you should save up at least 50 percent of the cost of an emergency repair before moving into your new home.
• Closing costs – Although these are one-time expenses, they are known to put many new homeowners in trouble.
  Closing costs are clearly stated in the new mortgage lending disclosures. If you feel that you will be wiped out by these costs, you may have to wait a little longer to buy a house.

Location and Lifestyle

Many prospective home buyers get stuck on the real estate adage of “location, location, location” when it does not necessarily apply to their lifestyle.

Moving to an upscale neighborhood could result in higher costs for utilities and groceries. Moving to exurban locations will certainly result in increased transportation costs; likewise, moving to certain parts of Florida, Texas and Arizona will require additional expenses in terms of air conditioning.

Speaking of climate, you may wish to look into truly energy-efficient homes that go beyond appliances with Energy Star stickers. Modern home building techniques favor passive cooling and heating methods that do not require mechanical systems for indoor climate control.

Even simple considerations such as natural lighting and west-facing living spaces can help save on your household expenses.

Moving into Your New Home

Whether you are signing a deed or a new lease contract, you can save on moving expenses by considering the following:

• Do-it-yourself moving should be a priority as long as you can take time off work to pack and move with the help of friends and relatives.
• If taking time off work will result in too much of lost income, you should try to schedule your move between May and September during weekdays; this is the time when rates are significantly lower.
• If you are downsizing, do not fall into the trap of paying for storage; if you have stuff that you do not utilize and that has no intrinsic emotional value, the best you can do is to hold a garage sale.

Furnishing and Decorating Your New Home

You should resist the urge to purchase brand-new furniture and decorations as you move into your new place. You can save considerably by visiting stores that specialize in used furniture and decorations; the key is to plan ahead of your visit by carefully measuring all living spaces.

Be sure to take pictures so you will have an idea of what will look better in your new home.

When doing research and formulating ideas, take the following concepts into consideration.

• Minimalism – This aesthetic and emotionally uplifting decoration trend is being adopted by younger Japanese families who wish to be frugal, environmentally conscious and not attached to materialism.
• Rustic decorations – This interior design style is not only fun to achieve on a DIY basis but is also very affordable. Combining minimalism with rustic interior decoration can be stylish AND frugal.

Achieving Energy Efficiency

To understand how much money you can save by striving for energy efficiency, you should start by installing smartphone apps such as Zero-Carbon, The Extra Mile, and CarbonTrack.

Once you become familiar with the concept of measuring your carbon footprint, it will be easier for you to calculate savings. Energy efficiency is more than just saving electricity; it also involves consuming less and reducing the amount of waste generated within a household.

Solar panels and insulation may seem like significant investments at this time, but they tend to pay off substantially in the long run. Other investments include smart lighting systems, compact fluorescent lamps, skylights, and smart water consumption practices.

Installing water saving shower heads and faucets could save you hundreds of dollars within five years, and the same goes for dual-setting or dual-pivot aerators that cut down on the amount of water used while doing dishes and using the kitchen sink.

From a financial point of view, it is more efficient to buy household cleaners that offer refills than single-use versions. When you start recycling containers, you can see the savings you realize right away.

Financial Education

Financial literacy statistics across the United States reveal a worrisome pattern of American families whose lives are impacted by their poor money management choices.

In a 2015 survey conducted by the Financial Educators Council, 56 percent of respondents indicated that they have no reserves or savings in case of emergencies. Furthermore, 41 percent of individuals who grew up as baby boomers fear financial hardships during their retirement, while 56 percent of members of the millennial generation think that heavy debt burdens are inevitable.

If you are worried about the figures above, you are not alone. Millions of Americans are taking steps to improve their financial education, but there is also a clear consensus about the importance of teaching responsible money management from an early age.

Teaching Children about Money Management

How early should we be teaching our children about the importance of money management?

As early as possible; ideally, starting in kindergarten.

In a consumer society that thrives on a capitalistic system, responsible money management should be taught at the same time good manners and proper social norms are introduced.

Here are the lessons you should be teaching your children:

1. Money Does Not Grow on Trees

Development psychologist Jean Piaget famously declared that children consider playtime to be their jobs; this should make it easier for them to grasp certain lessons about money being fair compensation for work performed.

The problem is that money given to children as gifts or allowances is not normally associated with earnings. In this fashion, children will find it too easy to spend money they did not have to work for.

Classic board games such as Monopoly and The Game of Life are fun tools for teaching money management, but they should also be complemented with real-life situations such as chores and keeping a piggy bank so that they can save up for toys they would like to get.

Getting children interested in savings will also teach them about values such as patience and perseverance.

2. The Value of Money

A piggy bank that is solely used for purchase transactions is too limiting.

You should also teach your children about saving up for long-term and charitable objectives by having them keep separate piggy banks, one to save up for what they wish to purchase, another one for long-term goals and a third for charity.

It is important to teach children about the charitable value of money and how they can save up for donations by keeping cash in a separate piggy bank.

Another neat idea would be to let them explore mobile apps such as Bankaroo.

3. Preventing Impulse Buying Habits

Frugal shopping can be taught at an early age. Most children enjoy going to the supermarket; this is a great chance for you to teach them about estimating costs and making your dollars stretch.

A trip to the grocery store should start with a list and a limit on how much should be spent. Allow your children to choose items; if they feel persuaded to pick an expensive cereal based on a television commercial they are familiar with, this would be a good time for you to explain that they can choose a more affordable item to stay within spending limits.

When taught from an early age, these habits will stay with them for life.

4. Responsible Money Handling

As your children grow up, you should let them experience situations such as paying bills, preferably at service counter so that they can count cash and check for accurate change.

Paying bills online can also be a teaching experience, particularly if you later show them the debited amount in your bank statement.

Planning for a family vacation can also be turned into a financial lesson as your children learn about the various vacation expenses.

It is important to get opinions from your children so that you can explain to them why they are reasonable or not.

5. The Basics of Savings

Once your children reach the age of 11, their math skills will be sufficiently developed to teach them about compound interest based on the fact that they could start at an early age.

The best way to teach about compound interest at this age is to use real numbers to input at Investor.gov, a website managed by the U.S. Securities and Exchange Commission.

Here is a sample calculation in 2017:

You give your daughter $100 when she turns 18. She deposits this monetary gift in a savings account, a deposit account with a modest interest rate, paying 0.05 percent interest, and she continues to deposit $50 per month. When she turns 25, she will have $3,107 to withdraw.

Child Savings Accounts

Once your children understand about compound interest, the next step should be to open a child savings account.

You will find that banks in 2017 are offering interesting options such as 0.75 percent annual percentage yield with no minimums. Online accounts are generally better for child savings accounts; however, younger children are likely to enjoy the interaction at physical branches.

Aside from the higher interest rates and online tools, the advantage of choosing Internet child savings accounts is that choices can be evaluated from home.

When evaluating online accounts, be sure that your children understand the following factors:

• Deposit requirements – Many accounts will require a minimum deposit, which children may have to transfer from one of their piggy banks, perhaps the one dedicated to long-term goals.
• Interest paid and fees debited – Be sure that your children understand the reasons why banks will reward their savings, which will often imply that they will not have immediate access to their balances. This will be a good opportunity to get them interested in accounts that do not charge service fees and that may provide better value.
• Saving terms – If your children grasp the concept of compound interest, they may be ready to understand certificates of deposit and why they tend to pay better rates of interest in exchange for stricter terms.

Above all, child savings accounts should convey a message about financial independence and how savings is an excellent tool for achieving long-term goals.

Saving Up for College

As your children grow older and become used to saving, you should introduce them to the reality of college tuition.

First of all, your children should get used to the idea of college as a tool for career advancement; explain that the money they are able to save now could be significantly increased with a college degree.

Your children should learn about the costs and expenses of college when they enroll in high-school. Comparing tuition costs at community colleges versus private universities can be a good introduction to the realities of American higher education.

This would also be a good time for you to pledge a matching contribution to the savings account if your child promises to enroll in college at their earliest opportunity, meaning that you can match their piggy bank or child savings accounts dollar for dollar as long as they pledge those savings towards college.

Finally, explain to your children that their choice of an institution should also be based on the financial assistance offered.

It would be a good idea to explain why there are scholarships and why federal government offers financial aid, which is to ensure that a well-educated population can augment economic development and the future of the country.

Furthermore, the government may offer remunerated repayment options such as working for federal agencies and joining the military.

Frugal Families

Saving money is not known to be a spontaneous practice.

Being frugal is more of a learned skill than an innate talent; families that master the art of frugality have a great potential of becoming prosperous as they grow together, but this is something that requires careful planning and diligent execution.

Families can develop and thrive under the auspices of a frugal life, which can begin at the moment a couple decides to marry and may continue as new family members arrive and later get ready to leave the nest as they head off to college.

Saving Money at Your Wedding

If you and your future spouse agree on planning a wedding that maximizes savings, congratulations: you found a partner with whom you can share your pennywise vision of domestic life and personal finance.

The days of letting the father of the bride handle all wedding expenses are over; the economic challenges of the 21st century are changing social norms.

If your partner’s family cannot help with the wedding, there is a good chance that your relatives will neither be able to do so.

If planning the wedding is up to you, here are some recommendations to make it as frugal as possible.

All-inclusive venues have the advantage of offering the ceremony, reception, and honeymoon in one place; however, they are not always as affordable as their marketing suggests.

There is one exception to this rule: some international wedding locations such as Costa Rica offer very reasonable packages in their rainy off-season, which runs from May until the end of November.

These packages are only affordable when numerous guests are involved; it will be up to you and your partner to convince friends and relatives to participate.

Try to maximize savings by planning your wedding well in advance and choosing Monday through Thursday for the ceremony.

With the right package deal, guests can pool their funds and pay for the package as much as possible; this would be their wedding present.

In 2017, digital wedding invitations are often free. Bridal registry providers tend to include them as a complimentary service.

Wedding cakes are falling out of style. Choose to have a small one for the cutting or even share a cupcake with your new spouse. The guests will also be delighted if you serve chocolate-chip cookies or muffins instead of the big, white cake.

The latest trend is to serve gourmet snacks at wedding receptions, but they do not have to be expensive; they can be platters made by grocery store chains such as Whole Foods or Trader Joe’s.

In California and Texas, gourmet food trucks that serve fusion Mexican and Korean cuisine have been spotted outside of wedding receptions.

Be creative and serve a cheaper, but still delicious wedding dinner.

Task the bridesmaids with do-it-yourself wedding decorations. Fresh flower arrangements are still favorite elements of wedding decor, and they can be made with local wildflowers in the season by gathering bunches, pruning unsightly leaves, and forming them into bouquets tied together with inexpensive ribbon.

Musical entertainment no longer has to be provided by live bands or DJs. A curated playlist can be put together in streaming services such as Spotify and a smartphone can be connected to the good set of loudspeakers.

Caring for Newborns in a Frugal Manner

The arrival of a tiny new member of the family usually comes with significant expenses. However, it doesn’t have to be that way.

Taking care of your bundle of joy will take a lot of your energy, so you don’t need financial worries on your plate as well.

As long as you adhere to certain frugal guidelines before the baby arrives, his or her first years will not impose a financial burden in your life.

Share the happy news, your friends and relatives will be more than happy to contribute to the baby shower bounty.

Registering at a discount store is the best way to go; if you know that some of your friends are financially challenged, let them know of the registry before sending out mass notifications so that they can purchase the most affordable items before anyone else.

When it comes selecting baby registry gifts, do not be afraid to select lots of supplies instead of single-use items such as cribs, strollers, baby monitors, and others. If your baby registry list is heavy on diapers, blankets, ointments, toiletries, wipes, and other supplies, the store will likely give you coupons or offer subscriptions to help you save.

With regard to clothing, furniture, and toys, don’t be afraid to get them all secondhand from thrift stores; your baby will not mind.

The one thing you shouldn’t buy secondhand is a baby car seat.

When it comes to safety, don’t think about the money. After all, you’ll be able to afford a quality car seat after saving on everything else.

At some point, you will need babysitters, and this is when it pays off to be an excellent family member or friend to others. Giving extra hours to babysitters who are already working for your friends or relatives may get you discounts.

The Life of a Frugal Student

The lives of cash-strapped students are often depicted in fictional works of film and literature, and they are lives that you want to avoid.

American college tuition is legendarily exorbitant, but the costs of living expenses often end up being even more challenging for students.

You should always explore every possible tuition assistance option.

Keep in mind that the federal school loan and grant systems went through a slight period of reform during the Obama administration; contrary to what many people think, the range of grants and loan programs has been extended and the application process has been streamlined.

You will not be denied a Stafford loan unless you are older than 25 and your parents are fabulously wealthy.

If this is your situation, the amount you can borrow will be reduced and there will be less grant money available.

Nothing should discourage you from applying to every scholarship and grant program available.

With regard to housing, your best option will always be to enroll at a local institution so that you can stay home; in fact, this is one of the best arguments in favor of community colleges, which not only offer lower tuition costs but also allow students to save on housing costs.

If you must move away to a college town far from home, you will need to get organized, start budgeting and think of different ways to stretch your dollar.

Here are some ideas.

• In large university towns, homes and apartments located close to campus tend to be more expensive. Try to look for shared housing that is about 30 minutes away on a bus or train.Use your student pass to get a discount on tickets, or even better, get in shape by biking to classes.
• Make the library your second home in order to save money on books. If you must buy them, buy from older colleagues or secondhand shops.When you’re done studying and pass your exams, sell the books you don’t need.
• Even though restaurants and cafes around campus tend to feature reasonably priced menu items, you should not only learn to cook at home but also learn to shop adequately.If going to the supermarket ends up being more expensive for you than eating at McDonald’s, you may need additional training in frugal shopping.
• Keep drinking, smoking and other vices to a minimum. You may not realize it now, but they can be a major drain on your wallet, not only on your health.

Lowering Your Monthly Utility Bills

Being able to lower your electricity, fuel and water consumption on a monthly basis can add up to considerable savings throughout the years. By reducing your carbon footprint, you will not only save money but also help protect our natural ecosystems.

Take a good look at your utility bills and find out what your minimum payment should be for electricity, heating fuel, propane gas, and water.

Each of these services has a base rate, fees, and taxes that you must pay even if you do not consume any of them.

Your next step is to adopt good practices that will get your closer to paying the minimum each month.

Here are some ideas:

• Residential solar energy systems can be a double-edged sword that you need to handle carefully. For example, if you finance an expensive installation in 2017, you may be subject to a repayment schedule based on a floating interest rate set by the Federal Reserve. Your best bet is to install individual solar panels that only power some appliances or systems in your home; for example, your water heater, without connecting to the grid.
• If you live in a sunny region and have a patio, do not use an electric dryer to do your laundry; let the sun take care of it. Also, you should research the possibility of installing skylights or solar lamps; plus, you can also try cooking some dishes in an outdoor solar stove.
• Research your propane gas options. You would be surprised at how much you can save when cooking, and heating your water with gas.
• All your home appliances should have an Energy Star certification; moreover, letting a smart home automation system handle your thermostat and lighting is a frugal idea.
• Reduce the amount of water you use by recycling it: you can use the shower water for flushing the toilet.Be a mindful user: take shorter showers, turn off the water while brushing your teeth and washing the dishes, wash only full loads of clothes and dishes.Also, it is always a good idea to check for leaks in all the pipes, hoses, faucets and couplings.

Saving with Technology

Saving up, becoming financially responsible and investing your money wisely are all things you may accomplish more effectively through the use of technology.

Learning about the tech tools that can help you with personal finance will also boost your interest in incorporating technology into other aspects of your life to make it more efficient and meaningful.

Visualizing Personal Finance

The traditional methods of creating household budgets with pencil and paper or using Microsoft Excel offer little in the way of data visualization.

Some spreadsheet templates feature macros that create simple charts to give you an overview or timeline of your spending patterns, but these are very basic visualizations that simply restate the amounts and figures you put in.

These days, you can take advantage of various online tools and mobile apps that combine intuition with effective user interfaces, rich visualizations, scenarios, and recommendations to improve your finances.

Before you evaluate online services and mobile apps, you should first review the basics of budgeting.

• Budgets are vital to personal finance because they show you where your cash is going. If you plan on saving up for certain goals, you will need to stick to your budget.
• You will need to gather up paperwork or electronic documents to calculate what is truly essential in terms of spending.
• One of the crucial goals of budgeting is calculating your disposable income after building up cash reserves. This is the income that you want to deposit into savings or invest.

Digital Budget Planning Tools

Many cloud-based budgeting tools have entered into partnerships with banks for the purpose of allowing you to link accounts by means of security permissions and data encryption; however, you can also choose tools that do not link to accounts and still provide you with a budgeting platform.

Here are some of the most popular tools:

Mint: If you are already familiar with online banking, Mint is highly recommended. In addition to providing you with useful budgeting prompts and opportunities for savings, Mint also alerts you to suspicious activity and high banking fees.

Buxfer: This service is recommended by the American Association of Individual Investors as a good money management tool for young people.

You Need a Budget: If you like the feel of traditional spreadsheets, YNAB will be easier for you to grasp. This tool encourages you to be financially responsible and to make the most out of the income you earned last month.

BudgetPulse: This service is for people who enjoy a hands-on approach to data input without giving away bank account information to a third party.

If you prefer real-time budgeting and keeping track of your transactions on the go, the following free apps for iPhones and Android devices may be of interest.

Expensify: As its name suggests, this app helps you track your expenses as it allows you to scan receipts and prepare PDF reports. You can also set spending limits and import credit card statements.

Level Money: This app lets you link your bank account and record your expenses on the go. Moreover, Level Money also gives you a snapshot of how much you can spend as you adhere to your personal budget.

Wally: This advanced expense tracker is very intuitive and learns from your spending patterns and budget items to issue sensible recommendations.

Mvelopes: According to Kiplinger.com, this app is perfect for those who need to control their spending as it is based on the traditional model of budgeting by means of separating cash in envelopes for specific payments and expenses.

PocketGuard: With this app, you can synchronize loans, credit cards and bank accounts for easy and consolidated management; plus, you can take advantage of partnership deals to save on certain cable and wireless monthly bills.

Online Banking Tools

In an effort to compete for your deposits, banks these days are offering online tools that you can use for budgeting, tracking expenses and transferring funds to savings.

Such is the case with PNC Bank’s Virtual Wallet, a smartphone app that links to debit and credit cards while providing you with budgeting tools and even the option of transferring change from purchase transactions to a savings or money market account.

Credit card giants such as Discover and American Express also offer online tools for personal finance. In the case of Discover cards, the Spend Analyzer and Paydown Planner tools allow you to keep spending under control while the AMEX Insights tool offers similar functionality if you operate a small business.

Traditional Budgeting Online

If you prefer handling your personal finances the old-fashioned way, you can download budgeting spreadsheet templates for Microsoft Office Online or Google Docs, which will allow you to record purchase and payment transactions on the go as long as you synchronize the documents with your smartphone.

Smart Home Automation and Home Office Technology

The era of connected devices and the Internet of Things is quickly developing in a new standard for households and home-based businesses.

Automation and remote access to certain devices can help you save on utility costs, payroll, and insurance premiums.

As of 2017, the smart home devices proven to reduce monthly utility bills include:

• smart lighting
• automated lawn irrigation
• advanced thermostats

Installing IP surveillance cameras or smoke detectors can further help you save by encouraging insurance companies to give you discounts on policy premiums. You can also achieve the same type of savings for your business if you work from home or if your company has brick-and-mortar locations.

Smart sensors that detect heat, smoke and water leaks can be connected to centralized hubs that connect to the internet and thus can be remotely accessed through smartphones.

Insurance companies often extend discounts to home and business owners who install smart automation systems that protect property and equipment.

New sprinkler systems not only connect to the Internet for remote smartphone access; they also monitor weather data collected from radar and satellite systems for the purpose of watering gardens and backyards when they really need it.

In rain-starved regions of California, these smart irrigation systems are keeping lawns healthy even during drought and water rationing periods.

Saving Money with Cloud Computing

If you operate a home office and have been considering hiring an assistant, you should first consider setting up a fully paperless office in the cloud; by doing so, you will cut down on hardware investments and may be able to hire a virtual assistant on a freelance basis instead of adding someone to the company payroll.

Cloud computing can also help you save on your office communications expenses.

If you are still using PBX systems or analog landlines, the time has come for you to switch your calling system to Voice over Internet Protocol. In essence, VoIP allows you to place telephone calls over the Internet.

In most cases, you will be able to keep your existing telephone number, but you will be paying substantially less for VoIP; moreover, you will get additional valuable features for your business such as:

• Voicemail
• Integration with your mobile phone
• Unified communication
• Interactive Voice Response systems
• Smart routing
• Call recording
• Call center setup

Public and Municipal Wi-Fi Networks

If you are traveling or if your office is located within the signal coverage area of a municipal Wi-Fi network, you may be able to cut down on your monthly broadband bills; however, you must install security and privacy safeguards when connecting to these public networks.

You should not take a Starbucks or municipal wireless network for granted; in this case, the only safe connection is through a trusted VPN connection.

Search online for reputable VPN providers; you will find that a few offer lifetime access for a one-time fee that includes technical support, updates, antivirus software, and security tools.

As previously mentioned, cloud computing can be the best business ally you can find in terms of value and efficiency. In essence, cloud computing offers various platforms as services that are offered for free or for very affordable subscriptions.

Let’s say you run a home inspection service for real estate agents and prospective home buyers; you should be able to run your business with just a laptop, a printer, an Internet connection, and a few cloud subscriptions such as Office 365, Skype for Business and Horizon Inspection Software by Carson and Dunlop.

From a cost-savings point of view, choosing the cloud for your business will always be the best choice. Not only will you be saving on hardware but also on paper, staff, and electricity.

How to Make Extra Income

Budgeting, reducing expenses and saving are not the only factors that contribute to success in personal finance.

If you really want to reach your goals faster as you advance towards financial independence, earning extra income should be added to your list of priorities.

Having some extra cash available can be of tremendous help when you need to face major life events or when you need to move to another residence, redecorate, repair your car, or upgrade your appliances.

You don’t necessarily have to get a second job or work overtime to earn extra income; there are other ways to produce additional cash at home and whenever you have free time.

Selling Online and Holding Garage Sales

The current minimalist trend in Japan is based on the aesthetic vision of the late Steve Jobs and on some of the spiritual principles of Zen Buddhism.

As minimalism slowly takes hold in the United States, individuals are getting rid of their unwanted items and learning to live with less clutter, which has the added benefit of reducing stress.

Unwanted items can be converted into extra cash by means of selling them online or by holding a garage sale.

You may not believe that your old toys, DVDs, furniture, books, or appliances have significant resale value, but the Internet makes it possible to find new owners for everything you own.

To get started, organize the items that you do not use frequently into three piles: things that you will keep and start using, things that you can sell online and things that should be sold at a yard sale or flea market.

Since selling online will likely result in more cash, you want to start with this method before holding a garage sale or renting space at a local flea market.

Here are some online platforms for you to consider.

• eBay: The escrow and auction aspects of this marketplace, as well as the low fees, make it ideal for items such as books, video games, CDs, DVDs, and electronics.If you do not have PayPal, this would be a good time to create a free account.
• Craigslist: This free platform is great if you want to reach out to local buyers, but you should keep in mind that this website attracts bargain hunters who will offer much less than what you may have in mind.
• Half.com: This eBay subsidiary is ideal if you want to sell your items at fixed prices instead of accepting bids.
• eBid: This eBay competitor is recommended if you want to sell your items fast and at low prices.
• Bonanza: In 2017, this online marketplace made headlines as a highly rated alternative to eBay based on its innovative marketing and appeal to members of the Millennial Generation.
• The Early Years Boutique: Perfect for selling baby stuff, but the prices are very competitive.
• MikList: If you have a Facebook account and would like to skip complicated registration processes, this free website is for you.
• BuyBackWorld: This is the best online marketplace for used smartphones, portable computing devices, and even gift cards. The site provides cash quotes for your used equipment; if you accept it, you can print a free shipping label or ask for a free kit to get your money faster.
• BriskSale: A MikList competitor that allows you to sell without having to worry about fees.

If you have any stuff leftover after trying to sell on the aforementioned online marketplaces, you may be able to liquidate the rest of your inventory by holding a garage sale or heading to your local flea market.

Be prepared to offer your remaining items for less than you had in mind, especially if you had already tried Craigslist. A successful garage sale will require advertising on Facebook or printing flyers to distribute and post around your community; you will not need to do this at the flea market, but you should invest in brightly colored paper and markers to create pricing labels.

It goes without saying that you should try to schedule the sale on a weekend, and you should also research pricing on eBay before you start haggling.

The best garage sales are festive, welcoming and social. You should engage interested buyers into conversations about the items you are selling; likewise, your children can make money on the side with a lemonade stand on a summer day.

Selling Craftwork

If you or a member of your household is into arts and crafts, the following online marketplaces can help you turn your skills into cash.

You will want to evaluate these sites based on their audience and style of crafts sold.

Etsy: This premier marketplace for handmade items has been very lucrative for quite a few sellers. The Etsy advantage lies within its close-knit community of sellers who often turn into buyers. Setting up an Etsy storefront costs less than $0.25 per item, and the integration with Pinterest can give your creations greater visibility.

CafePress: This print-and-sell on-demand service is ideal for graphic artists who wish to turn their trendy designs into stationery, T-shirts, wall art, clocks, and other household and personal items.

Ruby Lane: If your creations include fine art, porcelain, and jewelry that can command higher prices, you should contact the Ruby Lane in-house evaluation team. Commissions are higher, but you are bound to get more cash than what you originally expected.

Made It Myself: Similar to Etsy, this site has very reasonable fees and a growing community of sellers who are often the best buyers.

Once you have chosen the right marketplace for your creations, you will want to focus on taking the best photographs of your crafts.

To get the best results, you should also develop a marketing strategy to promote your items; this may include becoming active in the community and setting up a permanent e-commerce store.

Renting a Room

The bedroom or guest house you liberated from clutter as you sold your unwanted items can be turned into a source of rental income. An ideal situation would be a close friend or relative who can be trusted as a tenant; otherwise, you should first research state law and municipal ordinances before renting out any space of your home.

If you live in large metro areas or tourist destinations, you should be able to find a property management firm or real estate law firm to help you draft a lease agreement as well as to conduct credit and background checks on prospective tenants.

Craigslist and Facebook are good platforms for advertising your rental; be sure to take many photos that show a squeaky clean room in good condition.

Always insist on a security deposit, but make sure you review the leasing and tenancy statutes governing these payments.

If you choose to join platforms such as Airbnb, be sure to purchase a home protection insurance policy that can cover potential claims up to one million dollars.

Freelancing

If you specialize in the coding, business consulting, copywriting, journalism, marketing, or graphic design fields, you can get started with freelancing today; all you need is a computer and a reliable Internet connection.

Although experience and a good resume are always helpful, many freelancing platforms feature online tests to assess your skill level. Any pro bono work you have completed will count as experience.

Coders, copywriters and web developers can jump right into freelance work through platforms such as Elance, Textbroker, and Dice. In some cases, you may need to create an online portfolio to showcase your work.

Blogging and Social Media Promotions

If you are wise to the ways of digital content creation and social media engagement, there are a few ways for you to turn these 21st-century skills into extra cash.

Blogging: By choosing a website template that allows you to integrate online advertising from networks such as Google AdSense and Bing Ads, which offer you ways to earn income via pay-per-click (clicks to advertisers’ sites) and pay-per-mille (number of impressions).

You can also make money from affiliate marketing programs, sponsored content or even by promoting your handcrafts as previously mentioned herein.

Vlogging: Video blogging is similar to blogging but more lucrative. You will need to become familiar with vertical video production, which involves making a video that is optimized for mobile enjoyment.

Aside from the usual AdSense, Bing and affiliate marketing revenue channels, you can also sell merchandise with vlogging.

Instagram: If you have 10,000 or more Instagram followers who are thoroughly engaged, you could become an influencer for brands such as Hollister, Leapfrog PR, Shape Magazine, Grapevine, and others.

In essence, you will be posting sponsored content and augmenting the brand image of companies who choose to work with you.

Online Tutoring

English and Spanish tutoring sessions are highly sought after by foreign language students.

A few years ago, articles about informal Skype tutoring sessions were featured in the Wall Street Journal; these days, online tutoring platforms such as Udemy, Tutor Hub, Skooli, instaEDU, and others give you a chance to offer tutoring in a variety of subjects, including math, chemistry, finance, marketing, and even physics.

Telemarketing and Customer Service

If you have reliable broadband home service that can support VoIP connections, you can work part-time shifts as a telemarketer through platforms such as Upwork; for longer shifts as a customer service agent, you may want to apply at Alpine Access or Arise Virtual Solutions, which are companies that handle major accounts such as airlines and wireless service providers.

Alternatively, you can sign up in the national Do-Not-Call Registry maintained by the Federal Trade Commission; if you receive a telemarketing call that violates the registry, you may be able to join a class-action lawsuit that pays a monetary settlement award.

Taking Online Surveys

This method of earning extra cash online will not make you rich overnight; however, it mostly involves filling out forms, answering questions and giving opinions.

Some of the best survey platforms are MyPoints, VIP Voice and YouGov.

The latter survey platform is known to actively seek Hispanic and African American voices.

Mystery Shopping

If marketing research is a niche you are interested in, you will likely enjoy earning a few bucks as a mystery shopper. Although most mystery shopping assignments involve visits to brick-and-mortar retail establishments, you may find some online chat or telephone assignments at GFK.com, a globally respected consumer and market research firm.

Joining Cashback Solutions Programs

Getting approved for a Discover, American Express Blue Cash or Chase Freedom credit cards could actually put cash in your pocket. Modern cashback benefits still give cardholders the usual air travel miles, gift cards or discounts; however, the points earned these days can be exchanged for actual cash.

As of 2017, the most popular cashback programs include AMEX Reward Dollars, Chase Ultimate Rewards, and Discover Cashback Bonus. It is worth your while to evaluate the various offers; for example, the Chase Freedom card is great for frequent fliers while the Blue Cash Preferred from AMEX gives you six percent cashback at select supermarkets.

What You Need to Know When Starting a Business

Achieving financial independence is not only a matter of budgeting, saving and investing.

True financial independence means having real control over your earning capacity, and this is not something you can accomplish when someone else is in charge of approving your paychecks and salary raises.

In other words, as long as you take the right steps, starting your own business could be your express ticket to financial freedom.

As much as business ownership and the entrepreneurial spirit are celebrated in American culture, there are a couple of sobering statistics that you should always remember: a third of small business owners fail and call it quits within their first two years of operation, and more than 90 percent will fail before their fifth anniversary.

What you should know about these figures is that they are often associated with a lack of mentoring, poor vision and deficient accounting; keep this in mind as you review the advice presented in this chapter, which is designed to help you succeed as a businessperson.

Business Mentoring and Advice

Of all the golden rules associated with entrepreneurship, the most important involves seeking the advice of those who are more experienced than you are.

Aside from learning from the experiences of seasoned entrepreneurs, you will also gain knowledge about the realities of business ownership, which include regulatory matters, licensing, taxation, operating expenses, and other important aspects.

Here’s something you should know about business mentoring: 2010 Gallup survey conducted in more than 80 nations indicated that businesspeople were three times more likely to develop a sound business plan after consulting with mentors who can teach them to access resources, develop strategic partnerships and take advantage of networking.

Mission Statement and Business Planning

As you learn from your mentor, you will realize the significance of formulating a vision for your business. You will start with a personal philosophy that needs to be crafted into a coherent message that includes the following elements:

• Business opportunities
• Business needs
• Company principles
• Business objectives
• Level of service

Once you are ready to start transferring your thoughts to paper, you should start with the mission statement. You want to be concisely elegant when composing this statement, which should be based on the three dimensions of business:

1. What the business will accomplish for customers
2. What the business will accomplish for employees
3. What the business will accomplish for owners and investors

As you write your mission statement, you should be prepared to answer the following questions:

• Why should this company be formed?
• What does the company represent?
• Do you want this company to make you rich? Do you want to make just enough to pay the bills?
• What is your intended market?
• Will your company address a commercial need?
• How will you make your business appealing to employees?

Although you should always try to write a succinct summation of your mission statement, you should not confuse it with a slogan.

Check with your mentor and review the mission statements of successful companies such as Slack, the cloud-based instant messaging and social network for business teams; this is a business with a mission statement condensed into a single sentence that explains its desire to make work simpler, more enjoyable and more productive.

Your mission statement is not just for you as a business owner or for your investors and managers; think about it as a statement that will inspire your employees to perform their work in accordance to the ethos of the company.

Once you have established your company’s mission, you need to work on its vision; both vision and mission statements will be included in the business plan, but the vision should be condensed into points that can be subject to measurement and evaluation.

The idea is for you to be able to reference the vision statement whenever you feel that your company is not performing as it should. Consider the vision statement of Chevron, one of the most recognized names in oil production.

Chevron’s vision is to be an admired company, and it offers three elements worthy of admiration: people, performance, and partnerships.

At any given time, Chevron’s executives can evaluate and measure the status of any of these three elements to make decisions integral to the company.

Financial Planning

Writing a business plan solely for the benefit of a bank loan officer is a mistake made by entrepreneurs who do not realize the intrinsic value of a business plan that can serve as a blueprint for success or an operations manual.

Prospective investors will mostly be interested in reading how much of the company they can acquire while loan officers mostly look for collateral and ability to repay.

With this in mind, you should write a plan for yourself; a good plan should serve as a manual with a solid financial section that focuses more on budgeting than on projections.

The basics of a business financial plan boil down to:

• knowing how much you have on hand
• determining how much you will need to spend
• figuring out how much you will need to generate for the purpose of meeting your business goals.

Startup budgets will be different than future budgets in the sense that your business needs will change over time. You should create a new budget before signing a new lease, expanding your payroll or investing in new equipment and supplies.

In essence, you must determine whether you will have enough money after immediate expenses to pay for future expenses.

These are the elements of a business budget:

• Cash on hand
• Sales forecast
• Fixed costs
• Variable costs
• Cash flow
• Profit and loss
• Balance sheet
• Breakeven analysis

Your financial plan should justify the rest of your business plan by moving from the conceptual part to a tangible exposition of the viability of your business. As you get started, you will want to communicate with your business mentor.

More importantly, you should research the process of developing the budget and financial plan; even better, you should retain an accountant to check your work and to bring the plan to completion.

Start off with downloading worksheets and bookmarking an online calculator; two good sources are FreshBooks.com and Quickbooks.Intuit.com. Once you sit down with the sheets and calculator, you will want to follow five steps.

1. Business income. You must include sales and projections as well as contributions from your income and from investors.
2. Fixed costs. These will include expenses that remain the same each month.
3. Variable expenses. You may want to look at bank statements over the last few months and think of other costs you may incur in the future.
4. One-time expenditures. If the operation of your business will require you to attend a trade show, for example, you should estimate the cost now.
5. Tally the figures. Use your worksheets to list every detail and cash amount before adding everything up.

Setting Up Your Office

It is a grave mistake to ignore the importance of giving proper consideration to your office, particularly when it comes to location. You really want to get this right, and thus you should evaluate the following.

Location. You want to choose a neighborhood that is not only safe but also convenient for your employees, customers, and partners to reach.

Building. Compliance always comes first; you want to ensure that your office meets the accessibility requirements set forth by the Americans with Disabilities Act. Be sure to get a straight answer from the landlord or property manager about the cost of the utilities and broadband services.

Climate. An ideal office will have been built or remodeled according to green construction guidelines in terms of climate control and indoor air quality.

Shared office spaces are good options for startups looking to save up on their initial expenses. These spaces tend to feature advanced broadband and networking connections, and you do not have to require your entire staff to work from the shared space; consider allowing some employees to work from home.

If you decide that a traditional office is the best option for your company, you should be able to save on furniture by purchasing second-hand from places such as FurnitureFinders.com or Conklin; alternatively, you may find furniture leasing agreements to be very reasonable.

In terms of decoration and supplies, you should try going paperless and reducing hardware expenses by putting your entire data infrastructure in the cloud; if this is not possible, you should look into recycled paper and refilled ink cartridges for your printers.

Managing Your Employees

If you take good advantage of the freelancer revolution and the gig economy, you will not have to worry about health insurance or payroll management expenses. Telecommuters will sometimes accept lower pay when given the opportunity to work from home since they do not have to travel to the office each day.

You can also evaluate retaining a professional employer organization that offers employee leasing; these companies handle human resources and payroll while allowing you to manage workers and control productivity.

Employee turnover is an expensive and counterproductive situation that you must avoid at all costs. If you fail to engage members of your office staff, they will not think twice about taking their talents elsewhere, particularly if they are Millennial workers.

You will want to review the principles of Theory X and Theory Y, which deal with employee management; falling into the Theory X trap will result in a turnover.

To achieve Theory Y, you will need to keep open lines of communication and allow your employees to feel comfortable as they develop professionally; you can achieve this with positive feedback, reward systems, meaningful perks, and assigning responsibilities to workers who feel that they are up to the challenge.

Looking into Past and Future Expenses

As you execute your business plan and become more comfortable with the idea of being your own boss, you will learn to appreciate the value of reviewing your past performance in terms of spending while making projections that give you an idea about how much you will need to spend to stay in business.

The purpose of tracking and reviewing your expenses should not be limited to reducing them.

You will quickly find that it takes money to make money; there will be times when you will come to the conclusion that additional expenses could give you a competitive edge, and you should be prepared to determine when these funds will be at your disposal.

 Tracking Your Business Expenses

By now you should be familiar with the process of creating a reasonable budget for your business venture; your next step should be to dive into your previous expenses and create forecasts for them.

Tracking your expenses will lead to good business management habits. One benefit of expense tracking is that it often results in mindful spending; you may not realize how much of an impact seemingly innocuous expenses such as daily coffee and bagels have on your company, at least not until you give them critical context by reviewing them over the last three months.

When you track your business expenses, you will likely adopt a savings state of mind followed by a desire to monitor in greater detail.

Expense tracking will allow you to be prepared for tax season as you calculate your deductions, and you will also fall into a healthy pattern of financial discipline that will enable you to reimburse employee expenses on the spot instead of having to scramble for cash at the end of the month.

Choosing Your Money Tracking Solutions

Forget about the antiquated methods of filling up shoeboxes and manila envelopes with payment receipts; you do not want to be old-school when it comes to tracking expenses.

You can also forego hiring a bookkeeper; with the right software applications, you can automate your expense management process so that it is efficient, accurate and secure.

What you need to do is choose the right business accounting application for your company.

You want to look for a solution that can streamline and automate the following tasks:

• Business expense tracking
• Purchasing
• Inventory
• Payroll
• Ledger accounting
• Accounts payable and receivable
• Bank account connectivity
• Reconciliation
• Financial statements

The following business accounting solutions may offer more than just the above. Your criteria for choosing an application may include customer support, cost, mobile integration, and ease of use.

1 – Xero

This nifty accounting app resides in the cloud and has enough educational material to turn you into a professional bookkeeper and payroll specialist. If your company is a very small startup that generates five invoices per month and just a handful of weekly paychecks, you could use Xero for free.

The guided setup process is intuitive and will not overwhelm you with options.

2 – Quickbooks

If you have strong reasons to believe that your business will grow exponentially over the next 12 months, you may as well get Quickbooks Simple Start now. One of the most significant advantages of Quickbooks is that just about all bookkeepers and accountants are familiar with it; you will appreciate this feature when your business has grown into a mid-sized company with dozens of employees and multiple lines of credit.

The subscription pricing is very reasonable and gives you access to superb customer support.

3 – Zoho Books

If you are planning on running your business data structure from the cloud, Zoho Books would be a smart choice. This accounting solution integrates perfectly with other Zoho business products at very reasonable subscription prices.

Automated workflows, payment reminders and the ability to calculate billable hours are some of the many powerful features.

4 – OneUp

This app stands out for its sales team support features that allow employees to access customer relationship management features that integrate seamlessly with company accounting and inventory.

Unfortunately, features that require tracking of timed or recurring events are limited.

5 – Sage One

Business owners looking for a simplified way to assess the financial health of their companies at a glance will enjoy working with Sage One, a cloud-based solution that features very graphical and attractive dashboards. Although the range of customization is limited, Sage One’s invoice designs and formats create stylish documents.

Reconciliation has to be done manually, which may get trickier as your company expands.

Expense Tracking Apps

A few of the aforementioned accounting packages allow some level of expense tracking, but you may find that the dedicated solutions below offer greater functionality in this regard.

You want to look for apps that comply with the records retention requirement of seven years set forth by the Internal Revenue Service, and you also want to check for integration with the accounting software you are using.

If you have employees whose job duties require them to work from the field and make expenditures, you should get a mobile solution that allows scanning of paper receipts.

1 – Expensify

This is the app you want if you or your employees are expected to travel frequently for business purposes. Expensify is able to automatically track miles and events, and it also performs currency exchange conversions on the fly.

The optical character recognition (OCR) function of this app makes it one of the most advanced in terms of receipt scanning.

2 – Xpenditure

Automatic sync with online accounts and the best OCR engine in the market makes Xpenditure an ideal app for most business owners.

This app also connects with your bank accounts and with the popular ADP payroll service; plus, the ability to capture business card data allows integration with CRM systems.

3 – BizXpense Tracker

With this highly mobile app, your external contacts can be imported and organized for the purpose of filing accurate expense reports.

Integration with Quickbooks and other accounting solution and automatic tracking of miles traveled are also offered.

4 – Concur

This app lacks OCR features but allows you to take pictures of receipts. Concur may not be the best app for travelers since it does not track miles.

Automatic backups and integration with other apps are provided.

5 – Taxbot

As its name suggests, Taxbot is very useful when the time comes for your company to compile expense reports and present them as deductions during tax filing season.

Taxbot integrates with Google Maps to track miles traveled, and it also syncs with major credit cards to calculate expense reports accurately and with great detail.

The Future of Business is Green

In the modern business world, being eco-friendly means being pennywise.

By reducing the power consumption and overall carbon footprint of your business, you will be able to realize savings that you may be able to reinvest in your company.

Some of the best practices in this regard include:

• using smart power strips and smart light bulbs,
• insulating offices and installing smart thermostats,
• relying on recycled office supplies and switching to paperless environments.

Three other green practices for modern companies are directly related to business processes:

• cloud computing
• online marketing
• telecommuting

These practices are often discussed in terms of productivity and efficiency, but they also happen to be very effective in relation to reducing the carbon footprint of your business venture.

Cloud Computing is Green Computing

By the year 2020, enterprise cloud computing will produce nearly $200 billion in annual revenues, which represents only a fraction of what companies used to spend in hardware costs under the old client/server model of data architecture.

If you choose to operate your entire business data structure in the cloud, your savings in terms of hardware, electricity, and maintenance will be significant.

Server virtualization is a clear example of a green benefit provided by the cloud computing paradigm. The overall server footprint has been considerably reduced thanks to modern data centers that offer shared resources.

As a small startup, you might not need a server at all; instead, you can rely on Software-as-a-Service solutions that you can access from just about any internet-connected device equipped with a modern browser.

As your business expands, however, you will likely need your own server, but you will not have to install one in your office; you can let a data center set up a cloud server, thereby keeping your carbon footprint low. Even new workstations can be kept in the cloud.

Cloud computing adds another dimension to eco-friendly offices, a developing practice called Bring Your Own Device (BYOD), which consists of allowing employees to bring their favorite computing device to the office and allow them to connect to cloud-hosted platforms.

BYOD is green IT at its best because it takes advantage of existing hardware; workers who are part of the Millennial Generation tend to be very attached to their computing devices, particularly their laptops and advanced smartphones.

BYOD reduces hardware duplication and cuts down on hardware expenses; solutions such as Windows Continuum and Remix OS for Android make it possible for employees to turn their smartphones into full-blown workstations by connecting their devices to a keyboard and monitor at the office; however, you should consult with an IT security specialist before adopting BYOD policies for your company.

Yet another advantage of BYOD is that your employees will feel more comfortable traveling with the assurance that they can reach the office network from their personal computing devices. BYOD can also promote telecommuting, a green practice that cuts down on transportation and commuting costs as well as on their environmental impact.

Online Marketing

Although offline marketing is still a valid promotional channel for a few 21st-century businesses, there is no question that online marketing is friendlier to the environment. Direct mail and print advertising generate waste and tend to be more expensive than internet marketing.

When it comes down to dollars and sense, placing an online banner that features behavioral targeting and remarketing strategies is more environmentally friendly and cost-effective than a piece of direct mail or an ad inserted in a print magazine.

Social media and other marketing channels such as podcasts offer intimate connections with prospective clients and customers.

In the end, online marketing should always be your first consideration from a green and economic point of view; you can venture into traditional marketing when your business matures and expands.

Conclusion

For many people, living without financial stress will be their crowning achievement.

For others, true financial freedom will only arrive when they become successful business owners. These achievements are not mutually exclusive; in fact, they are far more meaningful and effective when they are combined.

Renowned American investor Warren Buffett has famously spoken about Wall Street as a contradictory place where people arrive on Rolls Royce limousines only to get financial advice from those who arrived on the subway.

There is a lot to ponder about this gem from Buffett; a lot of the advice presented in this guide is practiced by people whose income levels leave them no choice but to live a frugal life.

It is worth mentioning, however, that the current trend of minimalism in Japan is being embraced by young upper-class families who combine the personal philosophy of the late Steve Jobs, a legendary tech billionaire, with religious principles practiced by Zen monks, who choose a life of austerity.

As you embark on your journey towards financial freedom, you will notice that being organized is one of the keys to living frugally; this will apply to your life as an individual and as a business owner.

You must combine the advice from this guide with common sense and the use of technology to reach your goals; if you wish to live without financial stress, you must learn to visualize your spending and identify your opportunities for saving as you stick to your budget and financial planning.

The financial health of your household and of your business will be a significant factor in your overall happiness. If you turned to this guide because you were suffering from financial stress, you should be able to find relief and inner peace not just for yourself but also for your family.

Many people will tell you that you will be better off earning your own money as a business owner; this does not always need to be the case in your life.

Even if you are a wage worker, you can invite financial freedom into your life by making a commitment to spend less than what you earn; once you accomplish this important aspect of financial freedom, you can start thinking about earning extra income or starting your own business.

In the end, you should not judge yourself when you start applying this guide to your life; you should only change your point of view and your spending patterns.

Your wallet and your family will forever appreciate your efforts.