Could logging in to your computer from a deluxe treehouse off the coast of Belize be the future of work? Maybe. For many, the word freelance means flexibility, meaningful tasks and better work-life balance. Who doesn’t want to create their own hours, love what they do and work from wherever they want? Freelancing can provide all of thatâbut that freedom can vanish quickly if you don’t handle your expenses correctly.
“A lot of the time, you don’t know about these expenses until you are in the trenches,” says freelance copywriter Alyssa Goulet, “and that can wreak havoc on your financial situation.”
Nearly 57 million people in the U.S. freelanced, or were self-employed, in 2019, according to Upwork, a global freelancing platform. Freelancing is also increasingly becoming a long-term career choice, with the percentage of freelancers who freelance full-time increasing from 17 percent in 2014 to 28 percent in 2019, according to Upwork. But for all its virtues, the cost of being freelance can carry some serious sticker shock.
“There are many hats you have to wear and expenses you have to take on, but for that you’re gaining a lot of opportunity and flexibility in your life.”
Most people who freelance for the first time don’t realize that everythingâfrom taxes to office supplies to setting up retirement plansâis on them. So, before you can sustain yourself through self-employment, you need to answer a very important question: “Are you financially ready to freelance?”
What you’ll find is that budgeting as a freelancer can be entirely manageable if you plan for the following key costs. Let’s start with one of the most perplexingâtaxes:
1. Taxes: New rules when working on your own
First things first: Don’t try to be a hero. When determining how to budget as a freelancer and how to manage your taxes as a freelancer, you’ll want to consult with a financial adviser or tax professional for guidance. A tax expert can help you figure out what makes sense for your personal and business situation.
For instance, just like a regular employee, you will owe federal income taxes, as well as Social Security and Medicare taxes. When you’re employed at a regular job, you and your employer each pay half of these taxes from your income, according to the IRS. But when you’re self-employed (earning more than $400 a year in net income), you’re expected to file and pay these expenses yourself, the IRS says. And if you think you will owe more than $1,000 in taxes for a given year, you may need to file estimated quarterly taxes, the IRS also says.
That can feel like a heavy hit when you’re not used to planning for these costs. “If you’ve been on a salary, you don’t think about taxes really. You think about the take-home pay. With freelance, everything is take-home pay,” says Susan Lee, CFP®, tax preparer and founder of FreelanceTaxation.com.
When you’re starting to budget as a freelancer and determining how often you will need to file, Lee recommends doing a “dummy return,” which is an estimation of your self-employment income and expenses for the year. You can come up with this number by looking at past assignments, industry standards and future projections for your work, which freelancer Goulet finds valuable.
“Since I don’t have a salary or a fixed number of hours worked per month, I determine the tax bracket I’m most likely to fall into by taking my projected monthly income and multiplying it by 12,” Goulet says. “If I experience a big income jump because of a new contract, I redo that calculation.”
After you estimate your income, learning how to budget as a freelancer means working to determine how much to set aside for your tax payments. Lee, for example, recommends saving about 25 percent of your income for paying your income tax and self-employment tax (which funds your Medicare and Social Security). But once you subtract your business expenses from your freelance income, you may not have to pay that entire amount, according to Lee. Deductible expenses can include the mileage you use to get from one appointment to another, office supplies and maintenance and fees for a coworking space, according to Lee. The income left over will be your taxable income.
Pro Tip:
To set aside the taxes you will need to pay, adjust your estimates often and always round up. “Let’s say in one month a freelancer determines she would owe $1,400 in tax. I’d put away $1,500,” Goulet says.
2. Business expenses: Get a handle on two big areas
The truth is, the cost of being freelance varies from person to person. Some freelancers are happy to work from their kitchen tables, while others need a dedicated workspace. Your freelance costs also change as you add new tools to your business arsenal. Here are two categories you’ll always need to account for when budgeting as a freelancer:
Your workspace
Joining a coworking space gets you out of the house and allows you to establish the camaraderie you may miss when you work alone. When you’re calculating the cost of being freelance, note that coworking spaces may charge membership dues ranging from $20 for a day pass to hundreds of dollars a month for a dedicated desk or private office. While coworking spaces are all the rage, you can still rent a traditional office for several hundred dollars a month or more, but this fee usually doesn’t include community aspects or other membership perks.
If you want to avoid office rent or dues as costs of being freelance but don’t want the kitchen table to pull double-duty as your workspace, you might convert another room in your home into an office. But you’ll still need to outfit the space with all of your work essentials. Freelance copywriter and content strategist Amy Hardison retrofitted part of her house into a simple office. “I got a standing desk, a keyboard, one of those adjustable stands for my computer and a squishy mat to stand on so my feet don’t hurt,” Hardison says.
Pro Tip:
Start with the absolute necessities. When Hardison first launched her freelance career, she purchased a laptop for $299. She worked out of a coworking space and used its office supplies before creating her own workspace at home.
Digital tools
There are a range of digital tools, including business and accounting software, that can help with the majority of your business functions. A big benefit is the time they can save you that is better spent marketing to clients or producing great work.
The software can also help you avoid financial lapses as you’re managing the costs of being freelance. Hardison’s freelance business had ramped up to a point where a manual process was costing her money, so using an invoicing software became a no-brainer. “I was sending people attached document invoices for a while and keeping track of them in a spreadsheet,” Hardison says. “And then I lost a few of them and I just thought, ‘Oh, my God, I can’t be losing things. This is my income!’”
Digital business and software tools can help manage scheduling, web hosting, accounting, audio/video conference and other functions. When you’re determining how to budget as a freelancer, note that the costs for these services depend largely on your needs. For instance, several invoicing platforms offer options for as low as $9 per month, though the cost increases the more clients you add to your account. Accounting services also scale up based on the features you want and how many clients you’re tracking, but you can find reputable platforms for as little as $5 a month.
Pro Tip:
When you sign up for a service, start with the “freemium” version, in which the first tier of service is always free, Hardison says. Once you have enough clients to warrant the expense, upgrade to the paid level with the lowest cost. Gradually adding services will keep your expenses proportionate to your income.
3. Health insurance: Harnessing an inevitable cost
Budgeting for healthcare costs can be one of the biggest hurdles to self-employment and successfully learning how to budget as a freelancer. In the first half of the 2020 open enrollment period, the average monthly premium under the Affordable Care Act (ACA) for those who do not receive federal subsidiesâor a reduced premium based on incomeâwas $456 for individuals and $1,134 for families, according to eHealth, a private online marketplace for health insurance.
“Buying insurance is really protecting against that catastrophic event that is not likely to happen. But if it does, it could throw everything else in your plan into a complete tailspin,” says Stephen Gunter, CFP®, at Bridgeworth Financial.
A good place to start when budgeting as a freelancer is knowing what healthcare costs you should budget for. Your premiumâwhich is how much you pay each month to have your insuranceâis a key cost. Note that the plans with the lowest premiums aren’t always the most affordable. For instance, if you choose a high-deductible policy you may pay less in premiums, but if you have a claim, you may pay more at the time you or your covered family member’s health situation arises.
When you are budgeting as a freelancer, the ACA healthcare marketplace is one place to look for a plan. Here are a few other options:
Spouse or domestic partner’s plan: If your spouse or domestic partner has health insurance through his/her employer, you may be able to get coverage under their plan.
COBRA: If you recently left your full-time job for self-employment, you may be able to convert your employer’s group plan into an individual COBRA plan. Note that this type of plan comes with a high expense and coverage limit of 18 months.
Organizations for freelancers: Search online for organizations that promote the interests of independent workers. Depending on your specific situation, you may find options for health insurance plans that fit your needs.
Pro Tip:
Speak with an insurance adviser who can help you figure out which plans are best for your health needs and your budget. An adviser may be willing to do a free consultation, allowing you to gather important information before making a financial commitment.
4. Retirement savings: Learn to “set it and forget it”
Part of learning how to budget as a freelancer is thinking long term, which includes saving for retirement. That may seem daunting when you’re wrangling new business expenses, but Gunter says saving for the future is a big part of budgeting as a freelancer.
“It’s kind of the miracle of compound interest. The sooner we can get it invested, the sooner we can get it saving,” Gunter says.
He suggests going into autopilot and setting aside whatever you would have contributed to an employer’s 401(k) plan. One way to do this might be setting up an automatic transfer to your savings or retirement account. “So, if you would have put in 3 percent [of your income] each month, commit to saving that 3 percent on your own,” Gunter says. The Discover IRA Certificate of Deposit (IRA CD) could be a good fit for helping you enjoy guaranteed returns in retirement by contributing after-tax (Roth IRA CD) or pre-tax (traditional IRA CD) dollars from your income now.
Pro Tip:
Prioritize retirement savings every month, not just when you feel flush. “Saying, ‘I’ll save whatever is left over’ isn’t a savings plan, because whatever is left over at the end of the month is usually zero,” Gunter says.
5. Continually update your rates
One of the best things you can do for yourself in learning how to budget as a freelancer is build your costs into what you charge. “As I’ve discovered more business expenses, I definitely take those into account as I’m determining what my rates are,” Goulet says. She notes that freelancers sometimes feel guilty for building business costs into their rates, especially when they’re worried about the fees they charge to begin with. But working the costs of being freelance into your rates is essential to building a thriving freelance career. You should annually evaluate the rates you charge.
Because your expenses will change over time, it’s wise to do quarterly and yearly check-ins to assess your income and costs and see if there are processes you can automate to save time and money.
“A lot of the time, you don’t know about these expenses until you are in the trenches, and that can wreak havoc on your financial situation.”
Have confidence in your freelance career
Accounting for the various costs of being freelance makes for a more successful and sustainable freelance career. It also helps ensure that those who are self-employed achieve financial stability in their personal lives and their businesses.
“There are many hats you have to wear and expenses you have to take on,” Goulet says. “But for that, you’re gaining a lot of opportunity and flexibility in your life.”
The post Everything You Need to Know About Budgeting As a Freelancer appeared first on Discover Bank – Banking Topics Blog.
Love it or hate it, many Americans are spending more time at home. The coronavirus pandemic not only accelerated the work-from-home trend to warp speed, but it also shuttered schools and summer camps, scratched travel plans and canceled brunch and dinner reservations across the country.
Jen Dawson, a certified financial planner and managing director in Chicago, found that the uncertainty and stay-at-home lifestyle created by the pandemic prompted her clients to look at their financial situations in a new light.
âI think it just gives opportunities for people and families to reflect,â Dawson says. ââWhat do we want out of life? What do we want from our money?â Those conversations are really valuable.â
As Dawsonâs clients reflect on their goals, they (and many others) are also wondering, âHow should I adjust my household budget if weâre spending more time at home?â
How to optimize your budget for the stay-at-home economy in 4 steps
Ellen Rogin, a former wealth advisor and now a speaker, author and entrepreneur, notes that people across the country were affected by the pandemic in very different ways. While many workers were able to keep their jobs as they transitioned to working from home, many were not.
âThere are people who have lost their jobs and are being forced to make difficult decisions,â Rogin says. âAnd there are people who are still employed and earning the same income they did before, who have more options as they decide how they’re spending their money now.â
Even if youâve been spared serious financial challenges, you should still consider updating or creating a household budget or spending plan. This will allow you to determine how to save more money in the stay-at-home economy.
Rogin and Dawson encourage you to use this opportunity to ensure youâre at least staying on track to meet your savings goalsâand at best, shortening your savings timelines. Itâs also a chance to make sure that your spending habits, which have likely changed as youâve spent more time at home, are maximizing your happiness.
Below, we break down insights from Rogin and Dawson into four actionable steps you can take to save money in quarantine while living the best life possible. It all starts with taking an objective look at how your spending habits changed as you transitioned to a more domestic lifestyle.
Read on to see how to save more money in the stay-at-home economy by creating a new household budget:
1. Compare your spending trends before and during quarantine
As you set about creating a household budget for an at-home lifestyle and determining how to save more money in the stay-at-home economy, start by reviewing your spending.
âMost people donât really know how much money theyâre spending, whether times are good or bad. But it can really make you feel calmer to know what it takes to run your lifestyle.â
Dawson encourages you to refer to your debit and credit card statements to analyze the differences between your spending before staying home became the norm, and after. âYou can compare it and contrast and have observations and discussions around what changed,â she says. âWhat do you like that you want to keep going, and what do you not like about it?”
All you need, Dawson says, is a spreadsheet to total up your major expenses, such as housing, utilities, transportation, food and dining, travel, shopping and entertainment. Then, subtract the sum of those costs from the money you earned (aka income) over the same timeframe.
Do this exercise for three months of spending before quarantine and then again for three months of spending during quarantine. Youâll be able to compare the data to see whether you have more or less disposable income as a member of the stay-at-home economy.
Rogin notes that it can be a little scary to examine your finances like this, but thereâs no reason to feel anxious.
âMost people donât really know how much money theyâre spending, whether times are good or bad,â she says. âBut it can really make you feel calmer to know what it takes to run your lifestyle.â
If you see that your disposable income decreased while in quarantine (or that you no longer have disposable income at all), then youâll need to find ways to cut back on spending if you want to keep your savings goals on track. If your extra cash increased and youâre actually saving more money in quarantine, then you can start to consider how you might hit some or all of your savings goals more quickly.
Either way, you still have work to do as you consider how to save more money in the stay-at-home economy. Rather than focusing on external factors that are out of your control, Rogin and Dawson recommend that, as a next step, you ask yourself what matters most to you.
2. Ask yourself how your spending habits impact your happiness
Rogin considers the distanced, more remote way of life as a chance to reflect on whatâs really important in order to create your household budget. One example she points to is how many people have been cooking at home far more often than they once did.
âMaybe youâre spending more on groceries, but thatâs less than you were spending on eating outâand you enjoy it,â she says. âYouâre spending more time with your family. Youâre eating more healthily. So it gives you the opportunity to really assess your budget in a different way.â
Another example is travel. Rogin says that some people have told her that they really miss it, but others have been surprised to find how happy they are to pump the brakes on their jet-setting ways. In addition to saving money in quarantine from reimbursed travel and no more expensive trips, itâs allowed them to slow down and enjoy their time at home with family.
For her part, Rogin found that she wore the same two pairs of shoes during quarantine because theyâre comfortable, and no one can see them when sheâs video conferencing during work. As a result, Rogin cut this expense from her stay-at-home budget.
Whether youâre facing a cash shortage or surplus from more time spent at home, Rogin says that extending this line of thinking into a âvalues-based spending planâ for the stay-at-home economy will allow you to direct your money to what matters most to you, while diverting funds away from what doesnât.
Once you add up the expenses that are no longer necessary in your stay-at-home budget, itâs time to put that money to work.
Tip: When looking at quarantine spending, donât get too granular
Dawson underscores that evaluating spending patterns can be an emotional exercise. If youâre reviewing your finances with a family member, partner or spouse, try to resist the urge to nitpick every purchase. The trends should be easy enough to spot from a birdâs-eye view.
3. Put your stay-at-home savings toward your financial goals
Dawson and Rogin recommend having a plan when youâre trying to figure out how to save more money in the stay-at-home economy. That plan should include what youâre saving for, as well as where youâll keep the funds as they add up.
Rogin recommends framing your financial goals from a positive angle. For example, when you create a household budget, instead of focusing on cutting spending, you can set a goal for how much extra money you want to save.
If you have children or live with a partner or spouse, Dawson notes that this goal-oriented approach can help get them involved. The objective might be to start an emergency fund to ride out unexpected headwinds. Or, the focus could be on saving up for a big vacation to look forward to when travel restrictions ease.
When deciding where to keep your savings, a standard checking account wonât allow your money to grow like a high-yield online savings account will. Rather than pooling the money youâve saved in quarantine into one account, Dawson suggests opening multiple savings accounts, one for each of your savings goals.
âBe really clear about what each savings account is for,â she says. âThen youâre more likely to fund it.â
Of course, luxury savings goals like a vacation should not take priority over your long-term savings goals, such as retirement or college funds.
4. When saving money in quarantine, remember to support those in need if you can
If you are saving money in quarantine, Rogin suggests considering all the benefits of earmarking extra cash for philanthropic causes. It could go directly to the local small businesses you love that are hurting for revenue. Or it could go to any number of nonprofit organizations that are doing good in the world.
âSo many people are in need now,â Rogin says. âThere are so many beautiful ways that can help you feel like youâre making a difference for people by reallocating some of that money towards causes and people that you want to support.â
How will you start saving money in quarantine?
The stay-at home lifestyle may not have been in your plans, but you have the opportunity to gain control of your finances inside your home by creating a household budget that works for you in this new reality.
When you analyze, assess and optimize your spending and consider how to save money in quarantine, youâll be in as strong a financial position as possible when life gets back to normal.
If youâve been fortunate enough to save money in quarantine, consider starting or adding to your emergency fund. Not sure where to store your savings? Check out the four best places to keep your emergency fund.
Articles may contain information from third-parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third-party or information.
The post How to Save More Money in the Stay-at-Home Economy by Focusing on What Matters Most appeared first on Discover Bank – Banking Topics Blog.
Working from home has its perks. Thereâs the money saved from skipping the commute, and just think about all of that time you get back by avoiding crowded freeways or public transit during rush hour. As far as workplace attire goes, few employees would trade âwork-from-home casualâ for dress slacks.
But while working from home affords some new freedoms, it also creates new challenges. One of your biggest tasks is to create a productive, ergonomically correct workplace in your home without breaking the bank. If this sounds familiar, youâre probably asking yourself, âHow can I set up a home office on a budget?â
Whether youâve always worked from home as a freelancer or started during the pandemic, these expert tips will help you get started as you design your home office on a budget:
Strive for an ergonomically correct home office
Being home all day creates an unexpected obstacle: pain. Many workers find that transitioning from a well-equipped office to a makeshift setup at home leads to discomfort. Thatâs because many of them go from having a spacious desk, comfortable chair, and monitor and keyboard in their office building to working from a laptop in their living room.
If you suffer from neck pain or eye strain when working from home, you may be feeling the effects of poor ergonomics. Ergonomics, commonly known as the science of work, aims to optimize productivity and health in a workspace.
As a physical therapist with more than 25 years of experience, Karen Loesing, owner of The Ergonomic Expert, knows this issue all too well. Loesingâs company performs ergonomic assessments for businesses and home offices. Over the years, she has seen countless clients suffering from neck, back or other health issues due to poorly designed workspaces. But it doesnât have to be that way, Loesing says.
âHaving an ergonomically correct workstation enhances productivity and generally overall happiness at work.â
There are relatively easy ways to transform an ergonomic nightmare into a well-functioning home office on a budgetâeven if youâre stationed at the kitchen table, she says. And the investment is worth it.
âHaving an ergonomically correct workstation enhances productivity and generally overall happiness at work,â Loesing says. âFor those who are able to designate a certain space in their home where they can work without distractionsâmaybe even a window with a view and the flexibility to work at your own paceâit has been proven this makes for a happier employee.â
Who doesnât want to boost their health, productivity and happiness in one fell swoop?
Find the optimal location for your at-home workspace
When setting up a home office for remote work, location should be your first decision, says design consultant Linda Varone, author of âThe Smarter Home Office.â Depending on your living situation, there may be an obvious answer, such as that spare room youâve always thought could become an office space.
If you donât have a dedicated office, donât despair. While you design your home office on a budget, think creatively about where it can be.
Varone once visited a clientâs home to help reconfigure her workspace. The client was running a business from a table in the hallway. âAt the end of each workday, she had to pack everything up and store it in the closet in the guest room,â Varone says.
But as Varone learned, guests only stayed over two weeks a year, leaving the room empty the rest of the time. It hadnât occurred to the business owner, but turning the guest room into a home office for most of the year was the perfect solution.
âThere are some simple, simple ways that people can rethink their home office without a big investment and make that space really work for them,â Varone says.
In addition to using a guest room, a dining or living room can also function as a home office on a budget.
Establish the ideal setup for your workstation
Once youâve decided on the room, determine the location for your workstation, Varone says. As you plan your home office, consider placing your desk or table near a window, allowing for natural light and an occasional glimpse of nature. Donât face directly outside; instead, aim for a line of sight thatâs perpendicular to the window, Varone says. Thatâs because, even on an overcast day, youâd be looking into too much bright light if youâre facing the window.
âWhatâs happening is your eyes are adjusting back and forth between the bright sunlight that youâre facing and the darker light of your computer screen,â Varone says. âAnd that ends up being really fatiguing for the eye.â
If you live with others, the biggest challenge will be privacy. Try to clearly define the boundaries of your âofficeâ if you can, such as with an area rug, she says. Then ask your roommates or family members not to enter your space while youâre working, apart from an emergency.
If you use a multipurpose space, be sure to tidy everything up at the end of the day, Varone says. Taking the 10 minutes or so to clean up your âofficeâ will reduce clutter. Ultimately, a clutter-free space can reduce your stress and boost your productivity.
âThat also has a benefit of becoming a little ritual and helping you say, âAll right, my workday is over,ââ Varone says. ââNow I can focus on my personal life.ââ
Choose your furniture wisely
Now that youâve found the perfect location for your home office on a budget, focus on finding the perfect work surface. Maybe itâs a traditional desk. Or it could be your dining room table or kitchen counter.
If you do need to buy a desk or chair, donât feel like you need to spend a fortune. Try looking for a used office furniture store or liquidator in your area, Varone recommends. You could even try searching online marketplaces for a gently used model.
When planning a home office and considering your work surface, what matters most is the height.
The average desk is 29 inches high, Loesing says. This will likely accommodate someone whoâs 5â8â, she acknowledges, but for everyone else? It will take some adjusting to make it fit for them.
Thatâs where your chair comes in. Most people donât need a high-end office swivel chair to work comfortably. As long as you can adjust the height of your chair to fit you and your desk, youâll have a comfortable setup.
Itâs important to adjust the height of your chair to achieve a neutral position, Loesing says. If you donât have the instructions from the manufacturer on how to adjust your model, try searching for videos online, she adds.
One more chair takeaway from Loesing?
âIf you canât spend a dime, at least get as comfortable as you can where youâre sitting, and sit all the way back in your chair,â Loesing says. âWhen you donât sit so your back is against the backrest, youâre using your back muscles all day long instead of them being at rest.â
Adjust your furniture and equipment
As you continue planning a home office, youâll likely find that your computer is your most important piece of equipment. But it can also lead to neck strain. Whether itâs a laptop or an external monitor, Loesing says screen placement is key. In fact, she says itâs the single most important feature to addressâas well as the most commonly disregarded one.
While you plan your home office, Loesing recommends keeping the following ergonomic guidelines in mind to help avoid neck strain:
Align your monitor so your eyes are level with the screen. (Thatâs typically about 4â from the top of the monitor.)
Place your feet flat on the floor and your knees at about a 90-degree angle with the ground.
Place your arms at about a 90-degree angle from the writing surface so your shoulders are relaxed.
If you only have a laptop, and no monitor, you still have options for raising your screen to eye-level. âThere are budget-friendly laptop risers on the market,â Loesing says. âIf you donât want to spend any money, you can place books or reams of paper to bring the screen up to eye level.â
When setting up a home office for remote work and thinking about your arm placement, note that Varone is a strong advocate for an external keyboard. If youâre working at a desk that has a keyboard tray built into it, thatâs a great way to keep your arms at about a 90-degree angle, she says. If you donât have a built-in tray, she says you can improvise by placing your keyboard on an inexpensive laptop table situated directly under your desk.
While the exact adjustments will vary depending on your equipment, height and budget, the focus is on acquiring a neutral position or a position where thereâs no strain on anything, Loesing says.
âWith the addition of standing desks, which encourage movement, employees often find they have significantly more energy at the end of the day.â
Stand if it suits you
If youâre intrigued by the idea of a standing desk, youâre not alone. Standing desk sales have soared over the last decade, buoyed by reports of the dangers of too much sitting.
âStatic postures (e.g., sitting all day in front of a computer) present more fatigue than dynamic working,â Loesing says. âWith the addition of standing desks, which encourage movement, employees often find they have significantly more energy at the end of the day.â
You donât have to buy an official standing desk to reap the benefits when planning a home office. âThe least expensive way would be to take a laptop and place it up high on a built-in high counter using a compact wireless keyboard and mouse,â Loesing says.
Even if you donât have a standing deskâmakeshift or otherwiseâyou can still incorporate movement and circulation into your workday. Set a timer to remind you to stand up and stretch every 20 minutes, Loesing suggests.
For an even better boost, combine this with a popular guideline known as the 20-20-20 rule. Every 20 minutes, give your eyes a break by looking out a window at something at least 20 feet away, and do so for at least 20 seconds.
Donât forget the ambience and accessories
Your desk, chair and computer are the major players when youâre setting up a home office for remote work. But there are a few additional items to consider, like lighting, plants and sound.
Your overhead light fixture likely isnât enough, as it will create shadows and can be too weak by the time it reaches your workspace, Varone says. She recommends investing in a table lamp that creates a wider spread of light in your area. Pick one with a translucent shade that will softly diffuse the light and make it easier on your eyes.
As youâre planning your home office, Varone also recommends incorporating a potted plant or flower into your workspace. Not only can it help purify the air and boost your mood, a natural element can contribute to a restful atmosphere.
Working from home means working with home noisesâespecially if youâre in an environment with roommates, a partner or little ones. To keep the noise down, consider noise-canceling headphones for a quieter workspace and clearer meetings. Other budget-friendly options? Try placing a towel under the door to block out noise from other rooms, Loesing says. Consider curtains instead of blinds, since theyâre better at blocking out sound. Even pillows or large cushions can help reduce noise, she adds.
After youâve taken care of the essentials and if you have the space and money, think about adding a reading chair to your home office. You can use this as a space to review documents or do some deep thinking, Varone says. It can be a welcome respite from your desk while keeping you in the office area, she adds.
One last tip? Add a personal touch, whether itâs a framed family photo or a souvenir from your travels. Itâs your home office, after all. Let your personality shine.
Set up a home office for remote work that allows you to thrive
Now that you know how to create a home office on a budget, youâre ready to make a space that works well for you. Whether youâre an experienced remote worker or a newbie, you can apply these expert tips to set up an office thatâs functional and keeps you motivated day in and day out.
Ready to break in your new home office? Keep that motivation going by learning how to increase your earning potential this year.
The post Planning a Home Office? Check Out These Budget-Friendly Tips appeared first on Discover Bank – Banking Topics Blog.
Summer camp is a rite of passage. A place where traditions begin and memories are made. A unique venue with a structured opportunity for kids to grow and learn new skills. As enriching as it may seem, embarking on the process each year can be intense: How do I choose a camp? Should it have a philosophy? How do I know my child will have fun? But often the question at the top of the list is, “How do I budget for summer camp?”
Whether you’re scrambling for camp arrangements for this year or getting a jump-start on next summer, you’re in need of a working budget for summer camp. “As a parent who sent several kids to summer camp for many years, I know how expensive it can be,” says Leslie H. Tayne, author and founder of debt solutions law firm Tayne Law Group.
Read on for expert budgeting tips for summer camp and how to save money on summer camp so you can make the best decisions concerning your wallet and your child’s wish list:
1. Get a handle on camp tuition
According to the American Camp Association, sleep-away camp tuition can range from $630 to more than $2,000 per camper per week. Day camp tuition isn’t too far behind, ranging from $199 to more than $800 per week.
One of the best ways to budget for summer camp and prepare for tuition costs is to understand your needs for the summer as well as your child’s interests. This will help you determine ‘how much’ and ‘what type’ of camp you want: Is day-camp coverage important all summer because of work? Does your child want to experience sleep-away camp for a portion of the time? Is a camp with a specific focus (say a sport or hobby) on the list?
Depending on your circumstances and child’s expectations, it’s not unusual to be looking at a combination of campsâand tuition costsâin one season. If you have multiple kids at different ages, with different interests, creating a budget for summer camp and understanding how much you’ll need to dish out in tuition becomes especially important.
Once your camp plan is in place, assess how much you’ll need to pay in tuition for the summer months with school out of session. The sooner you’ve arrived at this figure, the easier it will be to work the expense into your household budget, says Heather Schisler, money-saving expert and founder of deal site Passion for Savings. “It’s much easier to set aside $30 a month than it is to come up with $300 to $400 at one time,” Schisler says.
Sleep-away camp tuition can range from $630 to more than $2,000 per camper per week. Day camp tuition ranges from $199 to more than $800 per week.
2. Plan for expenses beyond tuition
One of the biggest budgeting tips for summer camp is planning for the many costs outside of tuition. Tayne points out that sleep-away camp usually comes with a longer supply list than day campâsuch as specific clothing or gear and toiletries to cover the length of stay. If your child is heading to a sleep-away camp far from home, your budget for summer camp may also need to factor in the cost of transportation or the cost to ship luggage. Day camps can also have fees for extended hours or transportation if your child rides a camp bus each day.
Once you’ve selected a campâday camp or sleep-awayâcheck its website for camper packing lists and guidelines. Most camps offer checklists that you can print out, which can be good for tracking supplies and costs as you go. After you enroll, your camp may provide access to an online portal that can help you manage tuition and track additional expenses, like canteen money, which is cash your child can use for snacks and additional supplies while away.
3. Create a year-round savings strategy
By calculating the necessary expenses ahead of time for the camps you and your campers have chosen, you’ll be able to determine an overall budget for summer camp. A budgeting tip for summer camp is to save money monthly throughout the year. To determine a monthly savings goal, divide your total summer camp costs by the amount of months you have until camp starts. If camp is quickly approaching and you’re feeling the budget crunch, you may want to start saving for next year’s costs once it’s back-to-school time so you can spread out your costs over a longer period of time.
Once you start saving, you’ll need a place to put it, right? When it comes to budgeting tips for summer camp, consider placing your cash in a dedicated account, which will keep it separate from your regular expenses and help you avoid tapping it for other reasons. “Then you can have your bank set up an auto draft [for the summer camp money] so it automatically goes into your account each month and you will have the money you need when summer rolls around,” Schisler says. If you use a Discover Online Savings Account for this purpose, you’ll also earn interest that can be put toward camp expenses.
âIt’s much easier to set aside $30 a month than it is to come up with $300 to $400 at one time.â
4. Find ways to fund your summer camp account
To boost cash in your summer camp savings account, consider asking relatives and family friends to gift your children cash for camp in lieu of birthday and holiday gifts, says Tracie Fobes of budget blog Penny Pinchin’ Mom. “If your child has his or her heart set on sleep-away camp, they may be willing to forgo a gift or two,” Fobes says.
Another budgeting tip for summer camp is to put your cashback rewards toward your budget for summer camp. For example, if you open a checking account with Discoverâcalled Cashback Debitâyou’ll earn 1% cash back on up to $3,000 in debit card purchases each month.1 You can enroll to have that cashback bonus automatically deposited into your Discover Online Savings Account so it remains designated for camp costs (and can grow with interest).
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Lastly, if you don’t have your tax refund earmarked for another financial goal, you could use the windfall to kick-start your summer camp savings fund. Depending on the refund amount and your total camp costs, it could reduce your monthly summer camp savings goal significantly.
5. Reduce camp-related costs
Despite having your budget for summer camp in full view and planning in advance, camp can still be expensive. Here are some ways to save money on summer camp by cutting down on camp costs:
Ask about scholarships and grants: “Some camps offer scholarships or discounts for children and families,” Fobes says. Research your camp to see if they have anything similar to help offsetâor even pay forâthe cost of tuition.
Use a Dependent Care Flexible Spending Account (DCFSA): A Dependent Care Flexible Spending Account is a pre-tax benefit account that can be used to pay for eligible dependent care services. You can use this type of account to “cover dependent care [costs], and camp may qualify,” Fobes says.
Negotiate price: “Many people don’t think about negotiating the cost of summer camp, but it is possible,” Tayne says, and more and more camps are open to it.
See if there’s an “honor system”: Some camps have what’s known as an honor system, where the camp offers a range of costs, or tiered pricing, and parents can pay what they can comfortably afford. Every child enjoys the same camp experience, regardless of which price point, and billing is kept private.
Take advantage of discounts: Attention early birds and web surfers: “There are sometimes discounts offered when you sign up early or register online,” Fobes says.
Volunteer: If your summer schedule allows, “offer to work at the camp,” Fobes says. If you lend your servicesâperhaps for the camp blog or cleaning the camp house before the season startsâyour child may be able to attend camp for free or a reduced rate.
Don’t let summer camp costs become a family budget-buster. Plan ahead and look for money-saving opportunities and work your budget for summer camp into your annual financial plan.
To save money on summer camp, remember that you only need to focus on camp necessities. “Don’t spend a lot of extra money on new clothing, bedding, trunks or suitcases,” Schisler says. “Remember, summer camp is all about the experience, not the things.”
1 ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.
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When personal finance blogger Allan Liwanag was establishing his career and living paycheck to paycheck, he often had just enough money to cover his expenses each month. He ran into an issue with an old checking account that caused him some major grief.
“I forgot to account for the $15 monthly fee that the bank would charge,” Liwanag says. “So I was short covering my rent. It was a stressful situation because I didn’t know at first if the bank would process the payment for the rent or not.” The bank ultimately covered it, but Liwanag got charged $35 for an insufficient funds feeâon top of the original monthly fee.
Liwanag, who now runs a consumer money-saving site called The Practical Saver, learned a lot from that experience. The main point being, checking accounts can rack up feesâeven for standard activity. In fact, bank fees, including those for ATM usage and overdrafts, continue to rise year-over-year, according to a 2019 Bankrate survey. As Liwanag learned, fees could eat away at the funds in your checking account, which may become problematic when it’s time to pay bills or take care of other expenses.
What you may not know is that there are no-fee checking account options without the hassle of common fees. Discover®Cashback Debit, a no-fee checking account, for instance, doesn’t charge any account fees.1 It also offers no-fee checking without an opening deposit requirement, which is especially beneficial if you’re starting with a small balance or plan to make big withdrawals or transfers.
So you might be thinking right about now, “What are the benefits of a no-fee checking account?” To answer that question, it’s important to understand what types of fees you may be racking up and how you can make the most of a no-fee account. Let’s get to it.
Bank fees, including those for ATM usage and overdrafts, continue to rise year-over-year.
Your most common checking account fees
Checking account fees can become a trap you may not realize you’ve fallen into until it’s too late. It’s possible to be charged fees just for keeping your account open or for services or features you may have assumed came standard with the account. Being charged a fee doesn’t necessarily mean you’ve done anything wrong, but it’s a hassle you can avoid with the proper research.
Here is a list of some of the common checking account fees you could be paying:
Monthly fees to maintain or service your account
Overdraft or insufficient funds fees
ATM fees
Fees to order books of checks
Online bill pay fees
Stop payment fees
Replacement debit card fees
Not sure which checking account fees you’re dishing out for? Contact your bank or visit its website to get a copy of your deposit account agreement. This document usually has a list of fees related to your checking account that may apply to you.
Another good tipoff: “If you see monthly, quarterly or annual fees broken out on your monthly bank statement, you’ll know whether your account is truly no-fee,” says CPA and financial analyst Riley Adams of Young and the Invested, a site with strategies for financial independence.
It’s important to review your statements regularly to identify which fees you are being charged and to determine how that’s impacting your budget.
3 benefits of a no-fee checking account
Now that you’ve identified the many possible checking account fees you could be charged, you’ll find that the benefits of a no-fee checking account go beyond just freeing up some cash in your budget. In addition to the features you’re used to with a regular checking account, a no-fee checking account gives you a financial edge in the following ways:
More money for your financial goals. “Having a no-fee checking account can help you get ahead financially,” Adams says. “Instead of paying monthly service fees and even overdraft fees, you can apply that money toward your own financial goals.” The money you save on fees could be used to pay down debt, boost a savings account or help fund an education, business venture or vacation.
Flexibility. A benefit of a no-fee checking account is that it allows you to bank on your terms. If you’re just starting out, a no-fee checking account without an opening deposit requirement means you have the flexibility to fund the account with whatever amount makes sense for you. Need to make a big transfer from checking to savings? No problem, since you won’t have to worry about dipping below a minimum balance threshold. You can even go on your merry way using ATMs in your bank’s network without being restricted by fees, and if you accidentally overdraw, your no-fee account’s flexibility may save you the stress of a ding for insufficient funds.
No surprises. “Should I get a no-fee checking account?” was an easy decision for Liwanag because he knows exactly what to expect with one. “A plus of no-fee accounts is that you can rest assured that unaccounted-for or surprise fees will not kick you into overdraft,” Liwanag says. (Or, in other words, less s-t-r-e-s-s.)
Manage your finances with multiple no-fee accounts
There are also ways that no-fee checking accounts can help you better manage your income and expenses, in case you’re still wondering, “Should I get a no-fee checking account?”
Liwanag had no problem answering that question: âI have four,” he says, “which I use for easily tracking specific budget categories or expenses.”
As he explains, it can be easier to track expenses when money for different priorities, such as his emergency fund or that much-needed vacation, is bucketed into different no-fee checking accounts. Because he may be charged fees for excessive withdrawals from a savings account, Liwanag uses his no-fee checking accounts to manage the money he’ll need to access frequently for specific purposes.
The best part: Maintaining multiple checking accounts doesn’t cost him extra since a benefit of no-fee checking accounts means fees aren’t in the equation, he says. Some banks do have limits on how many checking accounts you can open, so be sure to consider this if you’re using a multiple account strategy like Liwanag.
Keeping your expenses organized is a pretty big motivator; so if you’ve answered “yes” to the question, “Should I get a no-fee checking account?”, the next step is knowing how to choose one.
Find the best no-fee checking account for your needs
Although the benefits of a no-fee checking account are key, don’t lose your head too much and forget to consider other checking account features that match your lifestyle. If customer service is your deal breaker, make sure the bank offers it around the clock and that it’s recognized for being top-notch. If you’re always on the go and your phone is right there with you, mobile features and mobile check deposit may be on the top of your list. If you’re regularly withdrawing cash, evaluate the bank’s network of no-fee ATMs and see if an ATM locator is offered to make tracking them down a breeze.
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If the benefits of a no-fee checking account are top of mind, you may also want to consider the perks of a rewards checking account. For example, Discover’s Cashback Debit even offers 1% cash back on up to $3,000 in debit card purchases each month.2 So on top of a no-fees savings strategy to meet your goals, you could also earn up to $360 a year. (Vacation, here we come!)
Start on your path to smart checking
Clearly, the benefits of a no-fee checking account and a no-fee checking account without an opening deposit requirement are numerous. Just be sure to do your research, then compare your findings carefully. The no-fee checking account you choose should ultimately help you reach your personal financial goals. You may find that saving on fees and reducing financial stress could be just the edge you need to set your checking account on the best course.
1Outgoing wire transfers are subject to a service charge. You may be charged a fee by a non-Discover ATM if it is not part of the 60,000+ ATMs in our no-fee network.
2ATM transactions, the purchase of money orders or other cash equivalents, cash over portions of point-of-sale transactions, Peer-to-Peer (P2P) payments (such as Apple Pay Cash), and loan payments or account funding made with your debit card are not eligible for cash back rewards. In addition, purchases made using third-party payment accounts (services such as Venmo® and PayPal®, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries. Venmo and PayPal are registered trademarks of PayPal, Inc.
The post Should I Get a No-Fee Checking Account? appeared first on Discover Bank – Banking Topics Blog.
If you have an irregular income, you know how great the good times feelâand how difficult the lean times can be. While you can’t always control when you get paid or the size of each paycheck if you’re a freelancer, contractor or work in the gig economy, you can take control of your money by creating a budget that will help you manage these financial extremes.
Antowoine Winters, a financial planner and principal at Next Steps Financial Planning, LLC, says creating a budget with a variable income can require big-picture thinking. You may need to spend time testing out different methods when you first start budgeting, but, âif done correctly, it can really empower you to control your life,” Winters says.
How do you budget on an irregular income? Consider these four strategies to help you budget with a variable income and gain financial confidence:
1. Determine your average income and expenses
If you want to start budgeting on a fluctuating income, you need to know how much money you have coming in and how much you’re spending.
Of course, that’s the basis for any budget. But it can be particularly important if you’re trying to budget on an irregular income because you may have especially high- or low-income periods. You want to start tracking as soon as possible to build up accurate data on your average income and expenses.
For example, once you have six months’ worth of income and expenses documented, you can divide the total by six to determine your average income and expenses by month.
Many financial apps and websites can help with the tracking, including ones that can connect to your online bank and credit card accounts and automatically pull in your transactions. You may even be able to pull in previous months’ or years’ worth of data, which you can use to calculate your averages.
If you’re budgeting on a fluctuating income and apps aren’t your thing, you can use a spreadsheet or even a pen and notebook to track your cash flow. However, without automated tracking, it can be difficult to consistently keep your information up to date.
2. Try a zero-sum budget
“There are several strategies you can use to budget with an irregular income, but one of the easiest ones is the zero-sum budget,” says Holly Johnson. As a full-time freelance writer, she’s been budgeting with a variable income for over seven years and is the coauthor of the book Zero Down Your Debt.
With a zero-sum budget, your income and expenses should even out so there’s nothing left over at the end of the month. The trick is to treat your savings goals as expenses. For example, your “expenses” may include saving for an emergency, vacation or homeownership.
“There are several strategies you can use to budget with an irregular income, but one of the easiest ones is the zero-sum budget.”
Johnson says if you’re budgeting on a fluctuating income, you can adopt the zero-sum budget by creating a “salary” for yourself. Consider your average monthly expenses (shameless plug for tip 1) and use that number as your baseline.
For example, if your monthly household bills, groceries, business expenses, savings goals and other necessities add up to $4,000, that’s your salary for the month. During months when you make over $4,000, put the extra money into a separate savings account. During months when you make less than $4,000, draw from that account to bring your salary up to $4,000.
“We call this fund the ‘boom and bust’ fund,” Johnson says. “By building up an adequate amount of savings, you will create a situation where you can pay yourself the salary you need each month.”
3. Separate your saving and spending money
Physically separating your savings from your everyday spending money may be especially important when you’re creating a budget on an irregular income. You may be tempted to pull funds from your savings goals during low-income months, and stashing your savings in a separate, high-yield savings account can force you to pause and think twice before dipping in.
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An easy way to put this tip into action when creating a budget with a variable income is to have all of your income deposited into one account, then disburse it into separate savings and spending accounts. “Transfer a set amount on the first of every month to a bill-paying account and a set amount to a spending account,” Winters, the financial planner, says.
“The bill pay account is used to pay for all of the regular expenses, like rent, insurance, car payments, student loans, etc.,” Winters says. These bills generally stay the same each month. The spending account can be used for your variable expenses, such as groceries and gas.
When considering your savings accounts, Winters also suggests funding a retirement account, such as an Individual Retirement Account (IRA).
If you’re budgeting on a fluctuating income as a contract worker or freelancer, you may also want to set money aside for taxes because the income and payroll taxes you’ll owe aren’t automatically taken out of your paychecks.
4. Build up your emergency fund
“The best way to weather low-income periods is to prepare with an adequate emergency fund,” freelancer Johnson says. An emergency fund is money you set aside for necessary expenses during an emergency, such as a medical issue or broken-down vehicle.
Generally, you’ll want to save up enough money to cover three to six months of your regular expenses. Once you build your fund, you can put extra savings toward other financial goals.
When you’re budgeting on a fluctuating income, having the emergency fund can help you feel more at ease knowing that you’ll be able to pay your necessary bills if the unexpected happens or when you’re stuck in a low-income period for longer than anticipated.
A budget can make living with a variable income easier
It can be challenging to budget on an irregular income, especially when you’re first starting. You might have to cut back on expenses for several months to start building up your savings and try multiple budgeting methods before finding the one that works best for you.
“Budgeting requires a mindset change regardless of which type of budget you try,” Johnson explains.
“The best way to weather low-income periods is to prepare with an adequate emergency fund.”
However, once in place, a budget on an irregular income can also help free you from worrying about the boom-and-bust cycle that many variable-income workers deal with throughout the year.
The goal is to get to the point where you can budget with a variable income and don’t have to worry about when you’ll get paid next because you set your budget based on your averages, planned ahead during the high times and have savings ready for your low times.
The post 4 Tricks for Budgeting on a Fluctuating Income appeared first on Discover Bank – Banking Topics Blog.
, who also provide P2P payments) may not be eligible for cash back rewards. Apple, the Apple logo and Apple Pay are trademarks of Apple Inc., registered in the U.S. and other countries.
