Another New Year…
Time for New Year’s resolutions again. Actually, I love this time of year. There is always something you can do to make your life a little better. The best time to get your finances in order was 20 years ago. The second best time is now.
Big changes don’t stick. Pick a couple small things you can change now. Here are some ideas related to household finances.
1) Stop using your credit cards. I remember when I got my first credit card. It felt like I was somebody, like I had finally entered the adult world. Buy something now and pay for it later. What’s not to like about that? Aside from that feeling, why do you continue to use credit cards? Miles, points, cash back? That’s all good, too, but not if it makes you spend more money than you have. Put the cards away in a place not easy to access. Resolve to use your debit card or cash for every single purchase.
2) Start an emergency fund. Go to your bank and open a new savings account and label it EMERGENCY. Set up a monthly automatic transfer from your main checking account. $100 every month minimum, more if you can do it. After a few months, see how it feels and bump up the monthly amount if you can.
3) Find out how much money you need every month to keep the ship afloat. Write down your mandatory expenses for:
housing (including utilities)
food (not including eating out)
transportation (gasoline, insurance, public transportation, auto repairs)
health (monthly bills for healthcare items you cannot live without)
mandatory debt payments other than mortgage (which should be included in housing).
Notice the list does not include vacations, cable TV, clothes (you have a closet full of clothes already), concerts, or many other discretionary items.
Finish the list. Add up the numbers and you’ll know how much money you really need to survive every month. Then you can start to layer on top of that things you would love to have or do - until you get up to your monthly take-home pay. Then, stop, take a breath and re-prioritize the “wants” until you get to something that works for your level of income.
None of this is easy. It’s simple, but not easy. Money habits die hard, but change is possible if you take it one small step at a time. Contact us if you need a helping hand. We provide one-on-one financial coaching for people who need a little help getting started.