Margin is that space between your normal and your maximum capacity. It’s that cushion in your life between your everyday responsibilities and your absolute limits. It’s that Saturday morning when you sleep in, or your 35-minute daily workout, or your few minutes alone with your cup of coffee in the morning before your kids wake up. Tapping into that margin when needed is fine (and inevitable), but the closer to your limits you live, the bigger the risk of hitting a breaking point. This applies to time, career, and of course money.
We recently took a dive into the how and why of creating a budget. Now we’ll look at how to actually stick to that shiny new budget. Here’s the secret: it all begins with spending awareness. You can’t master your spending unless you first understand how you’re actually spending. The more aware you are of your spending, the more control you’ll have over your money.
It’s official: the U.S. stock market has entered the longest bull market in its history. Since the stock market hit bottom in March 2009 during the financial crisis, U.S. stocks are up well over 300%. What does this mean for you? What goes up must come down. It’s inevitable the stock market will experience a downturn, and plenty of economists are predicting sooner rather than later. Here are three things you can be doing now to prepare for the next bear market.
Budgeting can be a drag. You don’t get to spend as much as you’d like on the things you want, and yet you still worry about whether there’s enough left over for essentials like saving and debt payments. But it doesn’t have to be that way. I’m going to introduce you to the one-number budget, which flips budgeting on its head and frees you to set aside money for your day-to-day spending.
Is saving important? Absolutely. Can a personal finance guru tell you exactly how much you need to save? Not a chance. I’ve never liked the use of formulas or bright lines as a measure of financial success. The best anyone can offer without knowing the specifics of your situation are guiding principles and habits, such as living below your means and planning for financial emergencies.
The new tax law means you likely saw a bump in your take-home pay starting in January. However, this doesn’t necessarily mean your 2018 taxes will go down. Now is a good time to review your tax withholdings and to ensure your budget leaves sufficient cash cushion to cover any tax payments next year if there's any uncertainty.