January is the perfect time to set in place some financial goals for 2017. You’ve probably decided that you want to put more money into a savings plan this year and maybe pay down that debt. Roughly three-quarters of Americans are living paycheck-to-paycheck right now, so where do you start? Prior proper planning is the number one factor in reaching financial goals.
Many of us begin a new year optimistically and perhaps armed with a set of resolutions to guide us down the road to improvement. Too often, however, we find ourselves seeking the same goals as in the past. If 2017 is the year you’re bound and determined to once and for all put into place a sound money management system, start with these tips:
1) Be realistic about your income –
No budget can cure the problem of not earning sufficient money to cover your necessities. If required, you may need to work overtime, pick up a second job, or be creative about turning a hobby or pastime into an additional income stream. When you are making more than you need to spend that is the time to begin fine tuning your budget so you can save money.
2) Accurately track your spending –
It’s recommended that you maintain an accurate spending log (electronic or on paper) and keep track of everything you spend for a certain period of time. For some, this is an ongoing habit, and if that works for you it is certainly one way to proceed. For most people, it’s better to employ this as a temporary way to get a complete and honest record of your spending habits. Diligently recording all purchases for say, at least two weeks or a month ensures you are not missing a budget item that should be included.
3) Beware the periodic expenses –
If you live in a hot summer climate, you likely see a significant jump in your electric bill during the period when you run your air conditioner. If you figured your budget using March, for instance, as a base amount, you’ve probably underestimated your total bill. Similarly, if you pay your homeowner’s insurance on an annual basis, this amount must be prorated in calculating a monthly budget. Successful money management begins with super accurate data.
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4) Focus on a few key categories –
Although it is a good idea to be energy-wise in evaluating your utility use, there are a number of fixed expenses where it is hard to save significant amounts of money. Similarly, your rent or your mortgage is a fixed dollar amount, which although a large part of the budget cannot be lowered by being frugal.
Instead, focus your attention on discretionary spending to achieve a brighter financial future. Look to categories such as dining out, entertainment, and vacations. Without depriving yourself entirely and living like a hermit, there typically is a great deal of flexibility when one examines these three types of spending. Planning and a realistic assessment of what you are spending can help you get a handle on your life.
5) Pay yourself first –
Too often, even for those who have begun a money management plan and created a realistic budget, they give themselves what’s left over after the bills are paid (it’s usually not much if anything at all). On the contrary, it is prudent to “pay yourself first,” and consider saving money a high priority. Saving money should be as high as any other single expense item in your budget.
6) Create a free budget online in minutes –
A realistic monthly budget is the foundation for successful financial management all year long. Without a clear idea of your monthly obligations and how much money you have to meet those obligations, it’s difficult to plan for any other expenses that you might incur this year.
We recommend using this free online budgeting tool called Online Budget Builder: http://www.onlinebudgetadvisor.com/budget-builder.html
This multipurpose yet easy-to-use budgeting tool helps you create a budget that’s tailored precisely to your spending habits and current financial situation. We created this free tool and put over 45 years of experience behind this software, creating an easy step-by-step process that makes creating a budget simple and satisfying.
7) Set specific goals and keep track of them –
If you want to start saving money, you might be thinking, “I’d like to save more money this year.” A general thought like this in your head as a goal is doomed to fail. Try to be more specific like saying, “I’m going to save $10 per week this year.” By doing this it leaves a specific action to follow, and it’s also a realistic amount so you won’t fail before you even start. Remember, $10 a week adds up to $520 in a year! Mind those pennies; the dollars will take care of themselves.
It’s difficult to predict how much money you’ll need in every category of life; a new job may require a wardrobe change and your clothing budget just isn’t going to cut it. That’s why it’s important to have a regular check on how you’ve set up your budget. If it isn’t working, then tweak it. It is your budget, after all; just make sure that you keep your long-term financial goals in mind.
8) Start saving today, even if it’s just one dollar –
Saving money when times are tough can be a difficult task. If you think about saving money in “big” terms, you’ll never save a dime. Why? Let’s see if this thought sounds familiar: “Well, I don’t make 100k per year and I can barely afford my bills now. How can I save money? I can’t save any money right now, forget it.” You just defeated yourself before you put one penny in the bank.
Remember, Rome wasn’t built in a day, you have to start somewhere! The key with saving is starting where it’s easy, where it’s comfortable for you. Let’s say you start off saying, “I’m going to save $500 every month.” Then a month goes by, you don’t get to $500, and you just defeated yourself again. Start with a small amount, something that’s easy so you don’t defeat yourself right off the bat. After a few weeks go by, and you have some success, then you can start to push yourself a little bit further and start putting in a little more each week.
9) Don’t spend more money than you have –
Stick to your grocery lists by compiling them based on an itemized overview of your household needs and never stray too far from it. In a similar approach, never go grocery shopping while hungry. Keep ALL of your receipts, and at the end of each day, list your purchases, and then at the end of the month group everything together to create an overview of where you’re spending your money.
For more money saving tips, try packing a “brown bag” lunch each day instead of going out to eat for lunch. Talk yourself out of purchases by asking yourself, “Do I really need this”? Think of various ways you can avoid a purchase that seems necessary through innovative DIY work or go thrift shopping to find a cheaper alternative. Give yourself a night to consider a purchase (sleep on it) and rationalize before buying a big ticket item. If you rationally decide you need it, you can go back and get it, if you have the money for it.
10) Become a super saver –
Do extensive research before all purchases; it only takes a few minutes to find the best price online or off. Do extensive research not only on price but on durability and quality as well.
If you happen to come in under your budget one month, save the excess money and don’t spend it.
Prevent an impulse purchase with this thought…Simply think about how many hours it took you to earn that amount. How long did you have to work just to buy that one item?
There are millions of savings tips out there; you just have to find the ones that work for you and that are easy for you to think about and carry out. Follow us on Facebook for more daily savings tips and advice: www.facebook.com/advantageccs
11) Remind yourself often of your savings goals –
Remind yourself frequently of your financial goals, especially when you’re out shopping or grabbing a bite to eat or anything that requires spending money. Remind yourself that by living frugally now, you’re setting yourself up for a great financial future.
Review your budget, receipts and spreadsheets regularly (daily if possible or weekly at best). Keep your financial situation constantly fresh in your mind. This helps to curb your desire to spend frivolously and motivates you to pay off debt and save more money. You can use free spreadsheets like Excel or Google Docs to keep track of everything, and you can also use tools like Budget Builder and Goal Tracker.
12) Knowledge is power –
Learn all that you can about personal finances, money management, the wise use of credit, and how you can best invest in your future. Don’t take the more common road of instant gratification, overspending, and endless debt buildup.
Read a ton of books or blog posts, go to free seminars, attend free classes or outreach programs, talk to your financially savvy family members and friends, and mentors. Get everyday real-world tips and advice from people who are doing well with their finances.
The more you learn about how to handle your finances properly and the rewards of doing so intelligently, the better you’ll be at not only creating a budget that works for you, but also sticking to it, saving money, and becoming debt-free.
13) Lean on friends and family for support –
If you think that you are the only one of your friends who is on a budget or being frugal, then you should take a look around and find a like-minded group of people to connect with. It could be an online forum, a monthly meeting or even just a couple of friends who are traveling down the same path in life. Please realize that you’re not the only person setting financial limits and trying to create a better future for yourself and your family.
By planning and monitoring your spending, you can get a handle on your finances and not feel guilty when another new year approaches.
A budget isn’t a prison cell to keep you away from your money or stop you from living your life; it’s a tool you use to keep you out of debt and help you build a strong financial future that will give you more freedom!
If you’re trying to save a little more this year, believe in yourself, have a good plan, and you will certainly be successful! If you ever need help, we are only a phone call or click away. Call us at 1-866-699-2227 or visit us online at www.advantageccs.org, and we’ll be happy to help!