More than half of all Americans live paycheck to paycheck. Unexpected expenses create major problems, and long-term goals like retirement may be out of reach. Regardless of income, financial planning can make a big difference.
People want to spend less so they have more money to save, or they want to pay down debt. But that can be very hard to do! Controlling spending is a struggle for most people. It becomes easier if we focus on a smaller piece, create a SMART goal, and set up a reward.
First look at where your money is currently going. Write down everything you have spent money on in the last three months. Use your bank statements, credit card bills, receipts for cash purchases. Be honest!
After you have listed all the money you spend, you have to create a budget. Begin by listing expenses or bills that have to be paid: rent or house payment, gas bill, city utility bill, loan payments, groceries, prescriptions, etc. Then list all your sources of income: payroll from your job, any government assistance, child support, etc.
Total income minus the total of the bills you have to pay gives you some idea of how much you can spend on extras.
Think carefully as you finish your budget. Put some money into savings. Use some to pay down debt. Then create categories like entertainment or clothing. Each of us has different circumstances, so this category will look different for everyone. Are there places where you can spend less? The following strategies are not enough to solve the problems of those who live in deep, generational poverty, but they can help those who are struggling to make ends meet.
There might be some obvious areas where you can cut expenses. Maybe you subscribe to TV channels you don’t watch. Which television networks do you pay extra for? Do you watch them? Do you still need cable or satellite? Do you pay to stream music? Do you subscribe to blogs you no longer listen to, or magazines you no longer read? It may be time to cancel some of these services.
Perhaps you could eat out less often, maybe pack a lunch and cook more meals at home.
Check your impulse spending. Resist the urge to buy more clothes, decorations, housewares, beauty supplies, entertainment, etc, unless you have clearly defined the reason you need that item. Don’t shop, in stores or online, just because you are bored. When you get those emails from retailers, unsubscribe.
Calculate how much you have to work in order to afford items. What is your hourly wage? How much is it after taxes are taken out? How many hours will you have to work to pay for that new pair of jeans? Is it worth it?
Your emotions affect lots of things, including your spending. Don’t shop when you’re feeling anxious, angry, hungry, or sad because it’s easier to let your guard down and make poor decisions.
Learn to be grateful for what you already have. If you own things you don’t use, maybe you can sell items using one of the online garage sale sites. You might earn some extra money and free up space. And if something doesn’t sell, remember that your donations are happily accepted at the Mission Store, the Collection Basket, and Goodwill.
Finally it’s time to create a SMART goal to achieve your financial resolution. A SMART goal is Specific, Measurable, Attainable, Relevant, and Time-Based. Maybe I’ve never done a budget before, so my SMART goal is to write down everything I’ve spent money on for three months. Maybe I decide to pack a lunch two days a week for the next month.
Making financial resolutions can get you fired up to create good habits and reach big goals. The trick is making them stick for the long term. To stay focused, choose a few critical resolutions that you know