Managing Your Money

This feature will touch upon three major factors in money management.

The first factor is establishing a realistic monthly spending plan, also known as a budget. Why do you need a budget? A budget can assist you in identifying wasteful spending, it encourages saving, it helps prepare you for unexpected expenses and it can start you on your way to setting financial goals. It is also important because there might have been a loss of income due to your situation.

How do start to create the spending plan?
You will have to track your spending for at least one month before you can create a realistic budget. The easiest way to do this is to keep a notebook with you at all times. You need to note every purchase, large, small or in between. For example, if you stop at a convenient store to buy a pack of gum, make sure you enter that purchase. You might be surprised when you see how small purchases like that add up. Typical monthly purchases include food and groceries, gas for the car, prescriptions, household items, charitable gifts to the church or other organizations, entertainment, car and home maintenance, as well as regular expenses, such as rent or mortgage, car payment, insurances, utilities, etc.

A good suggestion is to make note of the dates you pay your regular monthly bills. You can do this on a computer, an organizer or simply keep it in the notebook.

Once you have established or tracked your spending, you are ready to create your budget. You can design your own budget worksheet or you can obtain one from a not-for-profit credit counseling agency. (A certified credit counselor can also assist you in creating your actual budget and is generally done free of charge). After the initial draft of your budget is done, you need to examine it and determine where you can reduce spending.

Most experts will tell you that the easiest and fastest ways to save are to cut costs such as food and entertainment. Remember that a lot of small things can add up to substantial savings. You can save money on groceries in the following ways:
• Cut coupons, particularly items you use on a regular basis. If you can save $10 a week in this manner, you will have approximately $40 at the end of the month.
• Shop for bargains. Most stores have weekly and sometimes daily sale items. You might receive flyers in the mail or in your daily paper, but all stores have the flyers in-store.
• Use store brands when you can. Store brands are generally the same quality as the national brands, without the fancy packaging. (This is not to say that you cannot purchase a favorite brand if you have one, but if you have no preference, the store brands are good bargains) Again, set the bar at about $10 of savings a week and you’ll have another $40 in your pocket.
• Bring your lunch to work. If you cut out one lunch out per week, you might save approximately $25 a month.
• If you are giving to the church or other charities, consider donating time instead of money. You can provide good service and save some money. Let’s be reasonable and determine that you can save another $20 a month in this manner.
ALERT! You have now saved $125 for the first month. If you put that in a savings account, you would have $1500 in a year. How easy was it to save that? With just a little effort, you can do this. Imagine if you can get even more creative and find other ways to save?
Ask yourself the following question:
Can you commit to a spending plan that all but guarantees you savings?

If you are ready to do this, you will find that your general attitude about money may change dramatically and you will seek ways to cut wasteful spending. You will also be ready to take the next step, which is setting some financial goals. There are three levels of financial goals; short, mid and long term.
Short term goals are generally things you want to accomplish in about 6 months to a year. They would include but are not limited to: Starting a savings or investment account (These can be started with as little as $50), Getting ahead or caught up on debt such as credit cards or personal loans. Making minor purchases for things you may need. (Examples would be small appliances, household items or minor auto repairs).

Mid- term goals would be things such as purchasing an automobile, computer or maybe even saving for a short vacation. You might also be thinking of purchasing a home, which can be considered a mid or long term goal.
Long term goals might be saving for your child’s college or your own retirement.
It is wise to consider the following in setting financial goals:
• The goal must be realistic. There is little to no point in establishing a goal that in unreachable. Before committing to the goal, work out all the details and make sure that you have a reasonable chance to obtain it. Once again, a certified counselor can assist you in determining what goals should work for you.
• The goal must be flexible. Many people feel that a financial goal is set in stone and cannot be changed. Remember, you make the rules, so if you cannot reach an established goal, you can certainly set the bar a bit lower and still maintain the goal. Just having a goal and working toward it is a success!
• The goal must be measurable. As in any endeavor, we want to see where we are over time. With a financial goal, one of the best measurements is a visual one, that you can see every day, perhaps a graph or chart on your refrigerator door.
• Remember to celebrate when you achieve the goal. Whether you have hit the mark in the short, mid or long term, you have accomplished what you set out to do.
• Make setting and achieving goals a regular part of your life, both financially and otherwise.