Tales from the Wallet: Controlling Your Spending

how to control your spendingHow do you bring yourself back when you’re consistently over budget — what changes do you make, on either a small or large scale, to control your spending? We’ve talked about how to set a budget, as well as how to live within your means, but we haven’t talked about that thing that everyone needs to do from time to time:  rein yourself in when you’re spending more than you want to. There are two sides of this coin, I suppose.  First, maybe you’re spending too much and sending yourself into the red — credit card debt is climbing, other bills are going unpaid, etc. Second, maybe you’re still spending within your means, but you just feel like you’re out of control — maybe you were raised with a more limited budget, or maybe you just know you can save a lot more than you are right now.  Either way, the question is the same: how do you stop spending? (Pictured: Moyna Dollar Sign Pouch, available at ShopBop for $40.80 (on sale from $51).

I’ve done a number of things through the years, including: [Read more...]

Tales from the Wallet: Asset Allocation and Rebalancing Your Investments

asset-allocationWhat does it mean to have balanced investments, and how do you do it? What is a proper asset allocation?  I first tried to answer these questions about six months ago (maybe longer) and finally think I’ve got it figured out… kind of.  Still, do note: this is not intended as a tutorial, just a jumping off point for a discussion. (Pictured: Kate Spade New York Carmine Street – Lacey Wallet, available at Nordstrom for $158 in green, pink, and black.)

Why You Should Balance Your Investments

First — why should you balance your investments, or allocate your assets?  I read Ramit Sethi’s I Will Teach You To Be Rich a while ago — a great introductory book if you’re new to financial stuff, and definitely a quick read.  One of the only things that was new to me was his explanation of how and why to balance your investments, which I’d heard about through the years but never really focused on.  (To be honest, I kind of thought all I needed to know was that bit about subtracting your age from 100 and putting that percentage in stocks, which roughly translated to me as “invest mostly in stock index funds.”)  In Sethi’s book, he talks about how you should have a target asset allocation (also quoted on his website) of something like 15% TIPS, 15% Government bonds, 20% REITs, 5% emerging-market equities, 30% domestic equities, and 15% developed world international equities.  Whoa! That’s a bit different than “mostly stocks.”  But I suppose it’s easy enough to figure out, at least if you’re just setting up your investments for the first time.  So, let’s say you invest accordingly, and in that first year, domestic equities do AMAZING and emerging-market equities have a lousy year — so at the end of the year you may end up with 60% of your holdings in domestic equities and only 2% in emerging-market equities.  So, Sethi says, at the end of each year you should figure out what your target allocation is and then readjust so that you’re putting something like 20% into emerging-market equities and only 10% into domestic market equities.  Uh huh. Ok.  Simple! [Read more...]

Tales From the Wallet: How Much to Save For Retirement

women-savings-retirementHow much should you be saving for retirement? Are there savings benchmarks by ages? Is saving different for women? These are all questions that come up frequently (and no one really has all the answers) that I thought we should talk about them today. (Pictured:  Marc by Marc Jacobs Wallet, on sale at Bloomingdale’s — was $148, now $103.60.)

A few notes from poking around the Internet:

- According to the Department of Labor, on average women live longer than men, invest more conservatively, work fewer years (or work part-time/freelance jobs without access to a retirement plan).  Joy! MoneyLiving notes that women also have higher health care expenses, in part due to maternity expenses, but also higher premiums. [Read more...]

Tales from the Wallet: Setting Financial Goals

You always see personal finance articles advising you what to do at the end of the year — but I see far fewer of them advising what to do financially in the beginning of the year. Personally, I like to do two things around now:
a) I take a “financial snapshot,” and
b) I make three or four financial goals for the year.

(Pictured:  FOLLI FOLLIE Blue Stripes Wallet, available at Lord & Taylor (having awesome sales of up to 80% off today) — was $85, now $51.)  

The “snapshot” was inspired by the Excel spreadsheet that I started when we were looking to buy the apartment.  It’s just a listing of all of our accounts, investments, debts, and property — and it lists the current value for each of those line items.  Big deal, you say — [Read more...]

What’s YOUR Annual Clothes Budget?

How much do you spend on clothes — and how do you keep track? Reader T has a great idea for a topic thread:

Kat, there have been some interesting discussions lately about spending limits and annual clothing expenditures. How about doing an open thread on how much people spent in 2012 on clothing and accessories? You could ask people to list total amount, best/worst purchases of the year, industry, level of experience (ie: 5th year associate in big law), and perhaps salary or how much they spent as a percentage of total salary. I think this would be a really fascinating discussion!

This should be a fun one. We’ve kind of talked about this before, discussing how much you expect to pay for general items of clothing, as well as how to set a budget, but we’ve never really talked about a clothes budget.  (I have asked the question in surveys to readers — in our last survey, taken in August 2011, 40.2% of readers responded that they had spent “$500-$1000″ on clothes for the first half of 2011, with 27.8% saying “less than $500″ and 22.7% saying “$1001-$2500.”)

So, readers, how much do you spend on clothes?  Do you set an “annual budget” for yourself?  How do you enforce it?    [Read more...]

Tales from the Wallet: How to Open a Roth IRA in Less than 45 Minutes

Alexander Wang Quillon perch walletWe’ve talked about tax-advantaged savings before, but I actually just helped a friend get set up for a Roth IRA, so I thought I’d share some findings, and open discussion to readers — do you save money in a Roth IRA, IRA, 401K, or other tax-advantaged savings vehicle?  How much do you save — and what do you invest in?  (Pictured: Alexander Wang Quillon perch wallet, available at The Outnet for $142.50 (was $285).) [Read more...]