Are you finding it hard to balance your personal household budget every month? Sometimes there are small changes that can be applied that will make big differences in your overall cashflow. Knowing how to budget and educationg yourself on financial products are just a couple ways to take control of your hard earned money.
It is extremely difficult to juggle the amount of money that comes into our households every month. We get done paying the bills and buying the necessities that our family needs and it seems like there is nothing left for savings. Too much month and not enough money. How do you make small changes that can have big results in our personal finances?
1 Stop the noise
The first thing you have to do is stop listening to the doomsday reports all over the media. Their job is to alarm you enough so that you continue to watch and listen. Fear and panic sell television and newspapers. Try reading some great books on budgeting or retirement. Educate yourself on money matters by visiting educational websites. If your mind believes that you can be in control of your finances because you've educated yourself, you'll feel in control and be motivated by the positive instead of the negative.
2 Have a budget and stick with it!
Most people just have a list of the bills that are due. This is not a budget. A budget is when you allocate a specific amount of the income to certain areas of your finances. For example: 35% towards mortgage & taxes, 10% towards all other debt, 10% towards charity, 15% towards savings goals & 30% towards living expenses. Each category is then broken down to allocate individual areas. When you allocate a certain amount to a certain expense, it helps cut down on excess spending. You know exactly how much you have.
3 Cut spending
Take coffee from home, pack lunches, use coupons, cut down on multiple grocery runs, prepare meals ahead of time to cut down on eating out. Any and all of these will decrease the spending. Another really great feature is to re-introduce an allowance to your children. They are not really learning the value of money if it is generously handed to them for no reason. Give them a weekly chore list and then let them earn their spending. This is a valuable lesson for children of all ages. It also cuts down on that hole in your pocket!
4 Have a plan and a coach
A financial game plan is not just for the wealthy. Everyone should have a written plan to get out of debt and retire financially secure. A road map of where you are, where you need to go and how to get there. I know Primerica Financial offers a complimentary plan and coach. Most good financial coaches do not charge 'out of pocket' for their services. Beware of the sales pitches, ask others for referrals and do your homework. A great financial coach can be the difference you need to stay disciplined.
5 Educate yourself
Most families spend about 55% of their income on financial products; loans, insurances, credit cards and savings. If that amount is going out of your hard-earned money every month, shouldn't you understand what you have purchased? If you shop around for the best deal on a $500.00 washing machine, shouldn't you do the same thing for a $300,000.00 mortgage? We are educated that interest rate and payment are the important issues for financial products. How about total cost and when will it be paid off? Those questions are equally important and need to be asked. Remember: an educated consumer is a smart consumer!
6 Its time in the market not market time
A good 401k or IRA are great choices for retirement savings. These are long term investments Your financial planner should make sure that they are balanced and allocated for your age and situation. What you should be worried about is are you investing enough to retire and not have to live in poverty. Dollar cost averaging is when you are systematically investing in your retirement account. Even $50.00 a month is going to make a huge difference in that nest egg. You should know your financial independence number. How much are you going to need in your savings at retirement to live comfortably?
7 Save for emergencies
Your credit card or equity line of credit should not be your emergency fund. A separate account needs to be set up for these expenses. You have to make this a priority. Discipline is actually the reason that most families do not have this account. The extra money starts adding up and then it used for everyday purchases instead of left to grow. The best way to overcome this is to put this money in a different financial institution other than your home or business location. Do not get checks or a debit card for this account. When you have to transfer, it alleviates that sudden spending. Write a check to this account every month like it is a regular monthly bill. A forced savings from your paycheck also works great.
8 Giving the government an interest free loan
If you get a large income tax refund every year, you are allowing the government to loan your money for no penalty or interest. A $3,000.00 refund is $250.00 not coming into your own budget every month. Talk to your accountant and have this money re-routed to a savings or emergency fund. If you use it every year to pay bills, which is what most people do with it, wouldn't it make more sense to have it every month in the budget? Talk to a professional to make sure that you do not end up owing in.
9 Have some goals and dreams
Fun money funds are an excellent way to get everyone in the family involved with budgeting and saving. Cut out pictures of vacation destinations or gifts and put a goal in place to get them. Having a fun money savings helps to make all of the other difficult finances a little easier to handle. Make a loose change jar and recruit everyone to save in it. Have the kids put half of any gift money into a savings for something fun. Get creative with this and you'll not only reach these goals, but teach some great money lessons.
10 Little changes make the difference
Trying to make big changes all at once is too overwhelming for most people. Start with small changes and keep adding new ones as the previous ones start to work. Eventually you will have a strong financial house and be in control of your hard earned money. Remember to reward yourself when you have accomplished some financial goals. Little changes will make all the difference.
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Spreading the wealth in the simplistic form is the redistribution of wealth; either by voluntary transfer such as charity or by force in the form of taxes, government policies inflation and nationalization. The concept is to take from those who have it and give it to those who do not. We already have many forms of this practice in motion today; welfare, taxes, medicare and public housing, to name a few.
