Tag Archives: Budget

Feb 20 2012

Creative Savings Create a Balance

English: First 4 digits of a credit card

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Week Three: Create A Balance

Capping off my resolution to budget, budget, budget, and meet my financial goals, I have decided the most realistic course is to attempt to adopt a new attitude of thriftiness and simplified living. This will mean that I will have to make some cuts in my personal discretionary spending and also make some concerted effort to change how I approach each day.

Behavior changes are easier if they are taken one day at a time, so I am laying out a plan to approach this upcoming week that will hopefully equate to a Creative Savings Lifestyle Change… A change that allows me to still live rich, but also spend less.

This week I am going to focus on the art of using my own ingenuity and inventiveness in the effort to economize. To keep living rich though, it is not merely saving for the sake of saving; but is making a game of getting the most for the least outlay of cash.

To get started in the right direction (or to help refocus if you’re already headed down the frugal pathway), here is the first weeks’ worth of challenges to stretch the ability to think and act in creative but frugal ways:

Sunday For the next seven days, don’t spend any money on entertainment. Brainstorm with your family to come up with things you can do that are free: visit a library, do some mall-walking, or read some good books.

Monday Try not to purchase anything this week at full price. Use coupons, buy on sale, or simply delay your purchase until you can get the item at a discount. When you do spend, put yourself on a “cash only” system. Give your credit cards and even your checkbook a rest by buying only what you can pay for with cash.

Tuesday Today challenge yourself not to spend any money on anything. Enjoy the feeling of keeping your cash in your wallet.

Wednesday Put off a trip to the grocery store as long as you can this week. Be creative in using up what you already have in your pantry.

Thursday – Surf the Internet for new ways to save money. Sign up for a free e-mail newsletter, blog, or discussion list that will provide ideas and encouragement.

Friday Explore your cabinets for everyday items that can be “re-purposed” for things you believe you need: empty food boxes from Costco can be covered with construction paper and glue to make stackable toy containers or book nooks; sheets or pillowcases that are dingy and no longer used for beds can be trimmed and edged into doll blankets. Think to yourself: when I was in college and had no spare cash, what would I have done?

Saturday Look for ways to save gas and give your car a break this upcoming week and write out your plan. Combine errands, do business online or get some exercise by walking to places that are within walking distance.

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Feb 13 2012

Week Two: Budget, Budget, Budget

budget

budget (Photo credit: 401K)

Continuing along with February Financial Resolutions

Week Two: Budget, Budget, Budget

Week Two of my February Resolution, and it has become clear I definitely need to budget, budget, budget (or win the lottery, but that is still a financial dream) to meet my financial goals. I am determined to make my top three goals: the two-week trip with my grandchildren, staying at home so I can offer myself as an alternative to daycare for my children and grandchildren, and having a really big anniversary party for myself and my husband to celebrate 40+ years, including getting him the big gift he has his eye on – a new free-weight set.

That of course means cutting some corners and living frugally for me, because the way our family budget works, I only get an established piece of the whole.  That means I must start living in control of the finances I can control. I have some tried and true methods for organizing finances in a way that contributes to financial success, and I’d like to share them with you below.

This guide will help you to:

  1. Track Your Spending
  2. Create a Budget
  3. Determine Your Net Worth

1. Track Your Spending

Do you know how much you spend each month? If not, now is the time to find out. Many great advisors will tell you to track spending over a one-month period to find out exactly where all of your money goes. This is good, it does help, but we are humans, and lots of people change the way they spend when they start writing stuff down, and often expenses pop up in one month that aren’t always there (think: registration for your car, a visit to the doctor, a child’s birthday), so just writing one month of spending down does not really give the whole picture. How can I change that? you may ask…

If you participate in on-line banking, you can expand this to a three or six month retrospective review, and really get a quick-start on this part of the goal.  Just log on and create a print out of the last 90-180 days.  If you do not e-bank, you can get the same information if you stop by your local branch and ask a teller for a 180 day print out.  This will give you a great history of what you have been up to lately. I like color, so I highlight: Green is rotating bills, orange is groceries, pink is out to eat, yellow is gas, purple is entertainment, etc. Then I add up the specific areas and see what is going on and how I flex from month to month.

After you have either tracked your spending this month real-time, or used the bank print outs to give you a jump start, ask yourself – Are you spending too much on incidentals? Are you falling behind on your savings goals? Spending more than you make? By the time you finish this exercise you should have an answer to all of these questions. Below is a link from an excellent planner at frugalliving.com.  She has developed a worksheet that is visually appealing to use and very helpful:

2. Create a Budget

Once you’ve established a list of financial goals (week one) and taken a close look at your spending habits, it’s time to create a budget that reflects how you want to spend your money.

3. Determine Your Net Worth

Another very important part of budgeting is knowing what you have, not just what you want.  No point in attaining a goal if it risks your long-term future.  Understanding your net worth can tell you a lot about your current financial health, and help you to plan for your financial future. Find out what your net worth is now, and then get in the habit of recalculating your net worth yearly or whenever there is a significant change to your finances. This worksheet is also from the planner at frugalliving.com, and just as great as the monthly planner she created.

 

I wish you luck in Week Two – this is always the hardest part for me, and usually where I fall apart, so I am counting on my newly created Top Three Financial Goals to pull me through the adjustments – I love my morning coffee and I can’t help but want a few nice extras like my hair color or manicures.  So finding a way to not break the bank and attain all that I hope to this year is definitely an exercise in stepping out of my comfort zone!

 

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Feb 6 2012

Setting Top Priorities Using Financial Goals

 
English: Everything starts from needs or desir...

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Week one of my February Financial Resolution involved setting my top Financial Priorities and that to me means developing some Financial Goals.

Contrary to what may be one of my most treasured thoughts, a financial goal is not winning the lottery.  That is a financial dream.  A financial dream come true if you are the lucky 1:489,000,000.  A Financial Goal is something you’ve planned for. And it’s the planning – not sheer luck– that turns financial desires into financial reality.

As I stared at my piece of paper, I thought, what does a Financial Goal look like?

A financial goal lays out:

  • what you plan to accomplish
  • what resources you’ll need to make it happen
  • how much time you’ll need to make it happen
  • how you plan to make your goal fit into your overall budget and life

So hopefully, now that you have the key components, you are also ready to take this week to create your own financial goals.

Here’s How:

List your financial goals. Start by using the four steps above and write out what you want to accomplish. I created an example to share:

  1. What I want to accomplish: I want to take my grandchildren on a two-week national park vacation this summer. 
  2. The resources I will need are: Information on where we are going, money for hotels, meals, and gas, entrance fees for the national parks, souvenir money, emergency money, and perhaps additional resources I am not able to put in writing now, but should put some thought against as my plans develop. 
  3. How much Time I need to make it happen: I will need perhaps thirty hours to plan the trip, and I will need sixteen days to complete the vacation I have in mind. I am not sure the amount of lead time I need to save for the trip until I have a better idea of which parks I would like to visit.
  4. Plan into my overall budget and life: I will need my children and their spouses to agree to allow me to take the grandkids for two weeks; I will likely have to make some personal choices to save the amount needed to take the trip. I will have to save for the vacation, and perhaps make some sacrifices in my personal expenditures to have the financial resources for this trip.

Prioritize your Goals
Place goals that can be accomplished in under six months under “Short-Term Goals,” goals that can be accomplished in six months to a year under “Medium-Term Goals,” and goals that will take more than a year to accomplish under “Long-Term Goals.”

Estimate the cost.
How much money will it take to reach each goal? Create an estimate, and write down the resulting figure.

Set a target date.
When do you hope or need to meet your goals? Set a target date for each goal on your list, and use this as your deadline to meet or beat.

Determine how much you need to save.
Divide the estimated cost of your first goal by the number of weeks until your target date. This will show you how much money you need to save each week to meet your goal. Write down the resulting figure as an “Amount to Save Weekly”, and repeat for all of the other goals that you’ve listed.

Budget for your goals.
Rework your budget to include the money that you need to meet your goals. Then, put your plan into action, and watch those financial goals turn into financial reality!

Tips:

  1. Be realistic about how much time and money it will take to accomplish each goal – an estimate that is too low will only frustrate you.
  2. Keep your motivation by revisiting your list frequently to check on your progress.
  3. Setbacks will happen. If something throws you off of your target date, don’t give up – set a new date.
  4. Have more goals than you can work on at once? Then, determine which ones are most important to you, and make those your first priority.
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