Are you tired of struggling with your personal finances? It’s time to implement some new habits that can completely reshape your finances and help you enjoy your money, rather than constantly feeling as though you’re on the verge of drowning under the weight of your financial decisions.
1. Track Your Spending
Do you really know where your money goes each month, or do you often find yourself scratching your head at the end of a pay period, wondering why on earth you never have any money left over? If you’re struggling to figure out where your money is going–or if you just need a fresh start and a new look at how you’re spending–take one month and really track where every dollar you spend is going. Write it all down: a post-it note wrapped around your debit card is a great reminder! Write down that fast stop for coffee, and your trip to a fast food restaurant on your lunch break, and every time you fill up a tank of gas. Then, at the end of the month, look at your spending. Add up some of those incidental expenses, especially the ones you don’t usually think about before swiping your debit card or passing over the cash. Are there expenses that have added up more than you thought? Consider ways you can reduce your spending in those areas.
2. Create a Budget
You know where your money is going. Do you know where it should be going? No, you don’t have to have a strict budget that allocates every dollar in your checking account (though that’s certainly a great way to better understand what funds you really need for each area of your life). You do, however, need to have a general idea of your spending: how much you need to spend each month on your rent and utilities, how much you need to spend on gas, and how much money you have left over for fun spending.
3. Start Saving
As you’re crafting that budget, leave some room in it, not just for fun money, but for savings. There’s nothing quite like the security of having a savings account that will help bail you out if you get caught in a tough spot. A $1000 savings account doesn’t take long to save up, but you have to commit to it–and you have to remind yourself that your savings account is for emergencies, not for dipping into whenever you run out of money in your checking account. Over time, try to save up enough money to cover your expenses for 3-6 months. That savings account provides incredible peace of mind whether you’re dealing with job loss, injury, or unexpected expenses.
4. Learn to Walk Away from Impulse Purchases
“Oh, my gosh, that’s just perfect! I have to have it!” “Hey, that’s really cool–and I have that much money. Might as well buy it.” How many impulse buys do you have sitting around your house that never see the use they deserve? How many items do you have filling up your shelves that you don’t really need or want–items that simply become dust-catchers or, worse, end up in your next garage sale after barely seeing any use?
If you really want to increase your financial savvy, learn to avoid impulse purchases. For some people, this means staying out of your local discount store unless you’re actually looking for something you know that they should have. For others, it means learning to walk away from items you don’t really need at the grocery store or only going to the mall when there’s a specific item you’re looking for. Give yourself 24-48 hours to consider whether you really want an item before going back to buy it, unless it’s something you genuinely need. Often, you’ll find that you forget all about it within a short period of time.
5. Leave Yourself Some Play Money
You’ve set your budget. You’re working on decreasing impulse spending. Now, you have to stick to that budget.
Did you leave a little room to play?
In budgeting, like a diet, it’s easier to stick to your resolutions when you know you have a little room to play mixed in. You aren’t stuck never getting to buy another thing you want, so you can walk away from those impulse buys a little bit easier. At the same time, you have a set amount of money to play with. Once the play money is gone, it’s gone–so you’ll be more likely to save it for things you really want. Many people find that keeping their play money fund in cash makes it easier to avoid over-spending.
6. Create Lists
Most people have, at some point, had the experience of going through their cabinets and realizing that they were packed full of food, but nothing that they actually want to eat. The same is true of your closet: how many times have you opened it and gone through it only to discover that you have “nothing” to wear?
The next time you go shopping, create a list instead of shopping on impulse. Meal planning, for example, is a great way to know exactly what you’re going to eat for the week and cut down on unnecessary food spending, but you don’t have to have an elaborate meal plan to go through your cabinets and realize that, while you’re out of olive oil, you have three boxes of pasta and two jars of sauce already in your cabinet. Going clothes shopping? Instead of going in with a vague idea of, “I need more summer clothes,” or, “I need some bottoms to get me through the winter,” acknowledge that you need specific summer tops or that you need a couple more pairs of jeans. This simple strategy can make you much more likely to come home with the items you actually need, rather than more clothing that will end up shoved into the back of your closet.
Are you in need of some immediate cash for an emergency while you try to get your finances back together? If so, contact us! Koster’s Cash Loans can help you get back on track, paving the way for you to suffer fewer financial disasters in the future.