Be (financially) Free!
If you look at your bank account and wonder where all the money went, or swore you paid a bill and now you are told you are past due, you may have a budget problem or no budget at all.
This is not something that is taught in our traditional public education system. Young people are not usually armed with the knowledge of how to budget effectively unless their parents taught them.
There are numerous books, videos, and software out there for your reference on budgeting but it can be quite simple actually. Unless you are a chronic, habitual spender, then you might need to think about Spender’s Anonymous.
1. Write down all your incoming cash flow and all your bills.
2. Keep a check register. Today we all swipe our debit cards and think nothing of it. It isn’t as easy to have your register handy when you use plastic instead of a checkbook.
But if you keep track of your purchases from home once a day or a couple times a week, you will then know what you are spending your money on and you can make some changes if you need to.
3. Categorize. Have a category for food, fuel, bills, entertainment, etc. This will help you realize how much of each check is going towards what you need. If you have some leftover you can move it to another category that needs some more or you can save the extra cash.
4. Think twice when making purchases. When you think you just have to have something, take a deep breath and really ask yourself if you need this, want to spend money on it, or if there is something more important you can put your money towards.
Once you have effectively thought and answered these questions, you will be able to make a better purchase decision.
5. Don’t borrow money. Don’t apply for credit cards because of the rewards or you want to blow money you don’t have. Spend cash for everything and you’ll not end up in so much debt that you can’t see over it!
Perhaps having one credit card with a small balance would be smart for emergencies, but then don’t carry it in your wallet. Keep it at home.
6. Start saving something now. Anything will do and when you have a chunk, you can then put it into something that will earn a better return. Most people think they have to have thousands of dollars to invest or to save but that is simply not the case.
Quick tip – round all of your purchases up to the next dollar and save the change – talk about starting small! You will be amazed at how fast you can build your savings with this small step.
7. Find ways to cut back. If you only use half your cell phone minutes most months, reduce your plan. If you don’t watch TV, get rid of your cable. Dial up internet service is good if you rarely get on your computer and is cheaper than faster connections. Go to local farmers markets and buy your produce.
8. Shop at thrift stores and yard sales to find things that would be nice to have but you can live without it being brand spanking new.
9. Have an emergency fund. How long could you survive if you lost your job today? If the answer is less than 8 months, you could be faced with a very stressful situation if it happens. Cut out all nonessential expenses – vacations, new clothes, dinners out and nights at the movies – until you have saved enough to last 8 months without a paycheck. Why 8 months? That is how long, on average, it takes to find a new job.
10. Do without the expensive toys. Do they really need an iPhone, an iPod, a Playstation, a Wii, an Xbox, and a Gameboy? Kids can entertain themselves pretty good and it is cheaper!