Beginning of the New Year
It's no secret that most of us are glad to see 2008 behind us,--but there are some lessons we should learn from the events of the year:
Make a new year's resolution to set up a personal budget and design a plan to achieve your financial goals.
You're saying to yourself, "My finances are simple; I know where the money goes!" If you've never used a budget before, you probably don't know where you spend it--at least a big part of it.
Test yourself.
Write down the first five items and the amounts that you can name.
Here are some suggestions:
Mortgage/rent payment Car payment Credit card payment(s) Cell phone/cable/Internet Utilities Commuting expenses Contribution to retirement Groceries School expenses Travel That wasn't so difficult, was it? The expense amounts that are the same every month stick in our heads.
It's the other ones we don't remember that can provide us with chances to fatten our pocketbooks.
But how do we figure all of it out? Before you file last year's papers in the attic, why not use your checkbook and credit card statements to help you? Review where you spent your money in 2008, and compare that to what you want to do in 2009.
Hopefully, those boxes contain records of the normal expenses like haircuts, dry cleaning, school fees, gifts, vacations, clothes, pet supplies, and hobbies.
You'll soon be going through your financial records to gather data to use to prepare your taxes; why not get more benefit out of the exercise? It can give you a good starting point for your 2009 budget.
When you're done, add these expenses to your first list of recurring monthly bills, and total them.
Compare this total to your monthly amount of income.
I'll bet you still have 20 to 30 percent of your income to account for.
There are two basic ways to tie it down.
Use a debit card instead of cash.
It will track your spending and show you how much you really spend a week on lunches, bus fare, coffee, cigarettes, newspaper, and all of the other little things that you buy.
If you don't want to use your debit card, keep a journal of your spending.
Write down everything you spend, including the seventy-cent toll and quarters in the parking meter.
You're doing this to watch the pennies, and those pennies add up to dollars.
Once you've learned where you're spending your money, you'll be able to make choices to secure your financial future.
How can you change your spending habits? Do you really need that cup of gourmet coffee on the way to work every morning? Why not make it at home? Bring your lunch from home rather than eating out every day.
Lower the interest on your credit cards, so you can pay them off faster.
Sometimes all it takes is a phone call.
Or can you get a home equity line of credit to pay them off.
You'll have a lower interest rate on the balance, and it would probably be tax-deductible.
Watch your clothing budget, buy a few accessories rather than entire new outfits to make the dollars go further.
These are just a few suggestions, but you get the idea.
Let's say you find ways to save $200 a month in your spending.
What will you do with it? Increase your monthly payment on your credit cards; contribute to a retirement plan at work or to an IRA; set up a savings plan; or increase your monthly mortgage payment.
Call a financial advisor to help you make decisions to give you the best shot at financial security.
- Don't live beyond our means;
- Keep six to twelve months of living expenses in savings;
- Use credit cards efficiently; and
- Financial deals that are too good to be true, are.
Make a new year's resolution to set up a personal budget and design a plan to achieve your financial goals.
You're saying to yourself, "My finances are simple; I know where the money goes!" If you've never used a budget before, you probably don't know where you spend it--at least a big part of it.
Test yourself.
Write down the first five items and the amounts that you can name.
Here are some suggestions:
Mortgage/rent payment Car payment Credit card payment(s) Cell phone/cable/Internet Utilities Commuting expenses Contribution to retirement Groceries School expenses Travel That wasn't so difficult, was it? The expense amounts that are the same every month stick in our heads.
It's the other ones we don't remember that can provide us with chances to fatten our pocketbooks.
But how do we figure all of it out? Before you file last year's papers in the attic, why not use your checkbook and credit card statements to help you? Review where you spent your money in 2008, and compare that to what you want to do in 2009.
Hopefully, those boxes contain records of the normal expenses like haircuts, dry cleaning, school fees, gifts, vacations, clothes, pet supplies, and hobbies.
You'll soon be going through your financial records to gather data to use to prepare your taxes; why not get more benefit out of the exercise? It can give you a good starting point for your 2009 budget.
When you're done, add these expenses to your first list of recurring monthly bills, and total them.
Compare this total to your monthly amount of income.
I'll bet you still have 20 to 30 percent of your income to account for.
There are two basic ways to tie it down.
Use a debit card instead of cash.
It will track your spending and show you how much you really spend a week on lunches, bus fare, coffee, cigarettes, newspaper, and all of the other little things that you buy.
If you don't want to use your debit card, keep a journal of your spending.
Write down everything you spend, including the seventy-cent toll and quarters in the parking meter.
You're doing this to watch the pennies, and those pennies add up to dollars.
Once you've learned where you're spending your money, you'll be able to make choices to secure your financial future.
How can you change your spending habits? Do you really need that cup of gourmet coffee on the way to work every morning? Why not make it at home? Bring your lunch from home rather than eating out every day.
Lower the interest on your credit cards, so you can pay them off faster.
Sometimes all it takes is a phone call.
Or can you get a home equity line of credit to pay them off.
You'll have a lower interest rate on the balance, and it would probably be tax-deductible.
Watch your clothing budget, buy a few accessories rather than entire new outfits to make the dollars go further.
These are just a few suggestions, but you get the idea.
Let's say you find ways to save $200 a month in your spending.
What will you do with it? Increase your monthly payment on your credit cards; contribute to a retirement plan at work or to an IRA; set up a savings plan; or increase your monthly mortgage payment.
Call a financial advisor to help you make decisions to give you the best shot at financial security.
