You Can Take Control of Your Money with a Just a Notebook and a Can!
Read on for this simple way to get what you want with the least pain and how to get guilt-free splurge money!
Watch Out for These Spending Traps
Do you save so you can splurge? I have done that.
It feels like a game that you have mastered.
You keep expenses as low as possible so you can have little luxuries. It’s just smart. Or is it?
This system can work well, but it also has built-in traps. You may find yourself wanting more and more little luxuries and even higher ticket luxuries. Call it lifestyle creep or retail therapy; it can wreck your budget.
The worst part is that you can find yourself with lots of luxuries (that quickly don’t seem so great) but no real long-term gains. We are probably hard-wired for this behavior, but there are ways to out-smart these primal instincts (hoarding for future famine?) and take control.
Banish Wishful Thinking from Your Financial Goals
An important way to take control of your money is to make financial goals measurable. If you can’t measure it, it’s not real.
If you can’t measure it, it’s just wishing. And nobody ever got anything done by wishing and hoping.
Further in this post you’ll see how simple it is to use a spending plan to get what you want.
Set a Measurable Financial Goal
Here’s an example of a goal that you might be aiming for. Say your goal is to save $36,000 for a down payment on a house. You need to set a date for achieving that.
If you set it at 3 years from now, you know you’ll need to save $1000 a month. Too much? Set your goal at 6 years by saving $500 a month or whatever works for you. Put that money in a separate account so you can always see if you are on track from month to month.
The easiest way to save it is to have that money removed from your paycheck automatically at the beginning of the month.
How to Get Guilt-Free Splurge Money
Each month pay all your bills and write down in a notebook what you paid for what. Then see how much money is left at the end of the month. Put that money in a can. Yes, I said a can. It is your “fun money.”
The money in the can is your spending money for the next month. Keep it in the can if it helps you or in a ziploc bag in your purse. Or keep a note in your wallet with your up-to-date total of what you have left for treats and splurges.
If you have money left over in the can at the end of the next month you can leave it in there to accumulate for a bigger purchase or put it away in savings.
Build Your Emergency Fund ASAP
This works mainly if you have an emergency fund already in the bank for unexpected expenses. An emergency fund is for paying your basic bills if you become unemployed.
In 2015 the average time for workers below age 55 to find a new job is 7 months. Those older than 55 usually are unemployed for a year. If you are in your 60’s you may have to settle for part-time work at a much lower salary than your last job.
Build your emergency fund to cover your basic bills for the amount of time you think you would be unemployed. Once you have that in place you can decide if you want to increase it to equal your current salary x the number of months of unemployment. I know that’s a lot to save, but having a bit more than needed is better than not having enough.
If you are still building your emergency fund you’ll need to keep your spending money at a lower level until that emergency account is fully funded.
The Budget that Writes Itself
After a few months, keeping track of expenses in your notebook, you will see how your money categories are trending. This is the start of a written budget. Just write what your average amounts are for various bills and categories. A budget is nothing more than a spending plan that works towards your goals.
Of course you can go all 21st century and make this a spreadsheet. I just like the hands-on feel of writing it out in a physical notebook. It seems more real to me and I want it to feel real.
Be sure to set aside money each month for bills that don’t come every month, like tuition, insurance and taxes. Just divide those bills into monthly payments to accumulate in a savings account or checking account. Then you will have the money ready at the time those bills come due.
Here is where you can put your money-saving skills to work. Look for ways to cut those monthly bills so you have more money going in the can or toward some special goal. Why not lower your utility bills for example? Click here for proven ways to save money that are fairly painless.
You can always put pictures of your goals where you can see them every day to keep your goals in mind. Keeping a picture wrapped around your credit card sometimes helps.
When you are on target with your budget goals, you can enjoy that little luxury without guilt!
You have an emergency fund in place to cushion life’s inevitable shocks.
And you can enjoy the peace of mind that you are getting what you really want longer term!