Among the most popular New Year’s resolutions is the decision to do better with finances. Perhaps pay off debt, be able to afford a new vehicle or a different home, spend less, save more… But resolutions are difficult. The very definitive characteristics of a resolution are tough in and of themselves: to stand firm, to be resolved, to be established. If you’ve struggled to make financial changes, these can seem overwhelming. Some help to get you started…
(1) Resolve to track every dollar. To truly know what you are spending and where, you’ll need to track it for a couple of weeks. (And NO cheating! If you spend even one dollar, jot it down.) Without an honest picture of where your money is going, you’ll never see where you can make improvements.
(2) Establish a budget that is realistic. If you have a family of 4, don’t budget $100 per month for food. That is not going to happen. And if you have a coffee habit, love new books, enjoy golf, or any other side expenses, you need to work those things in. If not, you’ll blow your budget. Because, be honest, are you really not going golfing or reading a new book for the next week, month, or year?
(3) Don’t get discouraged by the paper. Now that everything is down on paper, you may be taken aback by the enormity of the money passing through your hands. You may even marvel at how you’ve survived so far – especially if your account page shows you in the negative numbers. But be encouraged! Now you can clearly see why you aren’t making any financial progress; and that there is hope. You can make it better. Wiggle room is there – you just aren’t seeing it yet. If it weren’t, you would not have made it through the past year.
(4) Find the wiggle room and squirm around until it’s bigger. Scrutinize where every dollar is going. Employ ways to spend less in every area. It IS possible! Use coupons for groceries, restaurants, and clothing; turn down the heat; take faster showers; adjust the refrigerator and freezer settings; unplug electric items not in use… Focus not only on big expenses, but especially small ones. Numerous tiny unplugged financial leaks cause a lot of damage.
(5) Grow up and stand firm. Having an “I deserve it” or “I want it now” attitude will hinder you every time; especially in the small stuff. “It’s only $3” can be famous last words. Here is a little trick: Instead of looking at the cost of something in dollars, calculate the cost in time. For example, a $3 purchase (to anyone making minimum wage), is representative of approximately 25 minutes of their life. Is that activity or item worth it?