Getting control of your finances – Practical Tips

By Charla Dury

You know that feeling you get when you finish a job?  The feeling of relief that the task is off your plate? That’s how I feel when I pay my bills.  The good news is you can have that feeling all month long with creative budgets and just a little financial savvy.

According to this 2016 Go Banking Rates Survey, 57.6% of Americans plan to set financial goals each new year when it is time to create resolutions. “Save more, spend less” and “pay down debt” rank high on everyone’s financial plan.

Why is it that these things are so hard to do?

 

Why are budgets so scary?

Fear of the unknown as well as the known

Many people don’t keep track of their money.  To me, this seems counter-intuitive.  In this article from The Simple Dollar, Trent Hamm found the issue facing most people is lack of self discipline.  In the article, Trent gives five great tips on how to cultivate the skill.

Self discipline, whether it’s in spending money or tracking it, is essential for financial health. Living paycheck to paycheck, like so many of us do, can be a big stressor.  If you find you’re out of money at the end of the month and you don’t know where it went, it’s time to do some tracking.

 

Track your spending

Take a week.  Track where you start, what you spend your money on, and where you end.  While one week can’t predict a whole month’s worth of expenditures, it can give you a bit of a baseline.  Spend like you normally would spend, just either write down your amounts and where you spent them, or keep all of your receipts and write it all down at the end of the week.

One week is much easier to commit to than a month.  You may find, however, that you need that full month’s worth of information.  Also, keep in mind that if you have more than one person using the same account, the other person/people need to be on board with the tracking as well.

You might find that you went to the grocery store three times that week and, since you forgot your list and went when you were hungry, you spent more than you could have, had you been more organized. You might find that you spend quite a bit on coffee or lunches during your work week.  You probably didn’t realize that it was so much.

 

Put together a plan for your creative budget

What money do you have coming in?  What are your bills going out?  Make a list.  Make sure you note when the payments are due, as some get paid in the middle of the month and some at the beginning and end.  While some people only get paid once a month, most of us have two or more checks and you have to think of that, too.

If you use your checking account and reconcile things online, make sure all of the purchases have gone through.  Don’t assume that the amount you see on the first page of your bank screen is completely accurate and that everything has posted.  Vendors use different transaction-based card processing applications and not all of them process at the same speed.  Upon checking your bank balance, you might think you have enough money for a purchase and you really don’t.

 

Horrible restriction or financial freedom?

Budgets don’t have to be restrictive.  Maybe it is the actual word that scares people off.  Let’s change what they’re called and call them spending plans.  I’m much less afraid of a spending plan because that means I plan to spend.  OK, if that’s all it takes, I’m good with that.

A spending plan can include wiggle room.  The wiggle room doesn’t have to have a specific planned use.  I have a line in my budget (oops sorry, spending plan) titled “Entertainment” that can go toward a movie, going out to eat, buying new shoes, taking a yoga class or even going to a concert.

 

Creative budgets are not an exact science

Spending plans don’t have to be exact..  While many monthly bills are always the same (think mortgage and car payments) many can vary from month to month (think food, gas and even utilities).  Enter a high, round number here.  Then, if the bill comes in less, you have a bit more wiggle room.

For expenditures where you found you overspent, try “cash in hand.”  Take a certain amount of cash out of your account and make every purchase of that sort with it.  You know that when the cash is gone, it’s gone.  No more.  Maybe you’ll be more careful just knowing that.  If you underestimated one month, either reevaluate your spending needs and bump your cash amount up, or resolve to spend less.  Go to the grocery store one less time (even going after you eat can make a difference!) each month.  Make a list, don’t go to the store without it, and stick to it.

Knowledge is power. Knowing where your money goes puts the power and control in your hands.

 

Does all this makes sense, or does it feel like too much to handle?

On Wednesday evening, May 24th, in conjunction with Mind Key, I will be offering a donation-based webinar on creating your personal budget.  This is a great starter class for anyone wanting to get a handle on their finances, or for new business owners who want to make sure next year’s tax season goes easier than this one.

Sign up HERE or by emailing charla@192.145.233.101 I’m also available to answer any questions. If you sign up for the webinar, and cannot attend, we will send you a video of the workshop to view at your leisure.

In exchange, donate as little as $1, or as much as $100 to help us continue to offer great classes such as this one. Spaces are limited to the first 50 attendees, so hurry!