I’m not sure about y’all but getting more organized with our finances is forever on my goal list. And this year, one of our big goals is to buy a house and we’d like to have a big chunk saved for it! I’m so glad Amber Guillory, Southern writer for The Belle Blog by night and public accountant by day, sharing her advice about money!
Hey y’all! Amber from The Belle Blog here! I am so excited to share some simple and effective ways to start the New Year with your personal finances in check! Here are my Top 5 rules for keeping your finances in shape this year:
1. Set a financial goal and get excited about it! Whether you want to get out of debt, live debt free, or save up for a special purchase, setting a financial goal opens the door to wrangling all of your finances int
o shape. Before making a financial decision, ask yourself “does this decision help me achieve my financial goal?” Trust me, this works wonders when you’re faced with those not-so-great impulse-spending situations. The best part is when you make a choice that inches you closer to achieving your goal you develop a great sense of pride and excitement!
2. Create a flexible monthly budget. I’ve found that the “b” word has such a negative connotation among people these days. Budgets are a practical and effective tool in achieving financial goals. Whether your income is great or small, budgets organize the outflow of your cash by categories and can help you scale your spending. Simply make a list of your sources of income and of your fixed and varied expenses (make estimates for any varied expenses). Organize these into a budget format and use as a guide for your monthly spending.
Over the last few years, I’ve created a few budgeting templates using both Excel and Word. However, I found them too time consuming to keep up with. About 7 months ago, I started using Mint.com and am hooked! They are a “read-only” service, meaning you can’t move money around using their software. They have bank-level security and are supported by RSA security (which is a top network security company). I am able to keep track of all of my bank accounts and credit cards (which I no longer have) in one place. I can create budgets and classify my transactions so that they are applied to the appropriate budget. Transactions can even be split several ways. So if you take out cash from the ATM, you can split it so that $20 goes to dining out, $100 goes to groceries, etc. Want to know the very best part? They have a free iPhone app to keep track of my budgets while I’m on the go! Mint.com makes budgeting a cinch!
3. Pay in cash. Call your grand parents or great-grand parents and ask them how they made purchases when they were your age? A majority will say they paid with cash. Why is this? Fifty years ago, living with debt was very frowned upon. People purchased what they could afford and paid for it with their hard earned cash. (I’m telling you, we can learn so much from how the older generation lived) But I digress. Paying in cash is proven to substantially decrease impulse spending and drive smarter, more intentional purchases. Plus, there won’t be any unwanted surprises in your bank account due to out of budget spending (or even worse, from identity theft).
4. Avoid temptation. Some may read this and think it’s a little extreme, but trust me this works! Take a hard look at your spending and determine where your weak spots are. (Does Target ring a bell for anyone? Or is that just me…) For some it may be shopping or for others it could be dining out or entertainment. No matter what your weakness is, identifying it can help you to avoid overspending. Here are two action items to help you conquer your weak areas:
When facing one of your weaknesses (i.e. a trip to Target), only carry the amount of cash you are comfortable spending. Leave your debit card and all credit cards at home. Once you spend your allotted cash, you won’t be tempted to overspend. This gives you the opportunity to spend responsibly but without all the guilt!
If you know that a certain activity isn’t in line with meeting your financial goal, then avoid it! Don’t put yourself in a situation where you’ll likely be tempted to spend out of budget. For instance, I avoid the Galleria during times when I know that clothes shopping won’t bring me closer to my financial goal. A little discipline goes a long way!
5. Be proud of yourself! Living responsibly is something to be celebrated! Spending money can often times feel pretty good, but I promise you it feels even better to know you made a choice that has a positive impact on your life and your goals!
This post is a part of the FRESH START series. A three-week series to get you ready for 2014. Each week will have a different theme, mind, home and body.