We are a few months into the New Year. Are you still sticking to those resolutions you made in January? Did you blow through your tax return and not do everything with it that you planned? Is money still causing you stress?
If you answered yes to any of these questions or if you are just looking for some ideas to improve your finances, pay special attention to the tips below:
1. Prepare a cash flow: In order to improve your finances you must know where your money is going. A cash flow is a simple spreadsheet that shows how much you bring in (income) and how much you spend (expenses) on a monthly basis. If the net cash flow (income minus expenses) is negative, then look for ways to make it positive!
2. Prepare a budget: A budget is set-up similar to a cash flow. Instead of using actual amounts, use planned amounts. Think about your planned income for the month and your planned expenses. Your budget, like your cash flow, should result in a positive net cash flow.
3. Automate savings: Open a savings account and make it automated. Treat savings like a bill: it must be “paid” on a regular basis. The best account to put your short-term savings in is a high-yield savings account. For some suggestions read my post on, “Tools of the Trade”.
4. Pack a lunch: Taking your lunch to work for five days a week would be ideal, but three out of five days is fine too. The goal is to stop spending money on eating out and other unnecessary expenses. Review the cash flow statement you created (Tip #1) and find areas where you can spend less.
5. Stop impulse buying: Major purchases definitely should be thoroughly planned, researched, and thought-out before you buy. Even smaller purchases like clothes and groceries should be planned out. You should not plan on spending $100 on groceries and spend $200. Stick to the budget you created in Tip #2.
6. Make a debt repayment plan: A budget should include debt payments, if you have debt. If you have significant debt, try to reduce other expenses and increase your debt payments. Here is a link to an excellent debt repayment calculator.
7. Make a savings plan: It’s best to have a few purposes for your savings: emergency fund, retirement, and other short-term and long-term goals. Determine how much you need for each of these purposes and prepare a plan to meet them.
8. Set SMART financial goals: Goals should be Specific, Measurable, Attainable, Relevant, and Time Bound.
9. Think and write about, “Why am I doing this?”: You’re not going to take the time to prepare a cash flow, budget, debt repayment plan, and savings plan, if you don’t think it will benefit you. Think about where you want to be financially and what it will take to get there. What do you want to teach your kids about money? Don’t just think about it, write it down so when you find yourself slacking, you can refer back to it and get back on track.
10. Be accountable: We are not in this alone. Most goals are achieved because we have people who support us. Tell a spouse, family member, friend, or your online community what you are trying to achieve. They can support you, check up on you, and hopefully even join you.
Put these 10 tips into action and see how quickly your finances improve. If you need help with your SMART goals or you are interested in worksheets to help with your plans, email me at email@example.com