Control spending to create financial freedom
In a consumer culture where everything is fresh and exciting, there will always be a must-have product. Purses, shoes, computers, cars — you could shop every day and never run out of cool new things to buy. So rather than enter the endlessly frustrating shopaholic cycle, throw your energy into a budgeting. It might not sound as fun as wearing the most flattering jeans while texting on the hottest cell phone. But the financial freedom will put a skip in your step that you just won’t find in new stilettos.
Step Away from the Cash Register
Step 1 of mastering your finances involves stopping your excess spending habits. Now. Cold turkey. That means quit buying stuff! Turn over a new and very uncluttered leaf.
Are you done yet? Good. Now that you aren’t out spending your time spending cash you don’t have, what are you going to do with yourself?
Master Your Money
Don’t let big numbers and a calculator intimidate you. It’s a powerful feeling, taking charge of your change, and it’s time you experienced it. It’s good for the soul, as well as for your bank account.
Start by making a comprehensive list of your fixed expenditures. These are the bills that remain the same (or vary little) every month. You probably have rent or a mortgage payment, a car payment and utilities such as phone, gas, water and electricity. If you are carrying credit card, you need to account for at least the minimum payments. You probably also have bills that must be paid quarterly, bi-annually or yearly. If you truly have no idea what your expenditures are, your first step is to start tracking everything you spend.
Now, make a list of all your variable expenses. You fork it over for food, new clothes, going out to eat, movies and other entertainment. Figure out what things can be cut out and which costs can be cut with coupon codes or freebies. It’s unrealistic to manage your debt by cutting out everything that is fun and enjoyable. Your goal, instead, is to plan ahead.
From Spendthrift to Thrifty
The thriving, successful consumer makes conscious, deliberate decisions about where and how to spend money.
Let’s look again at those fixed expenditures. How many of them are necessary to your well-being?
• Do you need an unlimited cell phone plan and a landline?
• Do you need 463 cable channels, as well as 4 movies-by-mail at a time?
• Do you pay higher credit card bills each month for subscriptions and services you don’t really use?
Review every bill and determine how many of your services are necessary and how many have outlived your interest. When you’ve cut every excess from your monthly expenditures, compare your projected spending to your income.
This is where you decide what you can spend on the fun stuff.
Priorities First
Thrifty people understand that, no matter how well they plan, there is always going to be a rainy day. You’re working on keeping a roof over your head, but how will you rebuild it when lightning strikes?
Savings should become your No. 1 budget category. Conventional wisdom says you should be putting away at least 10% of your earnings. This is in addition to retirement savings.
After savings, factor in your expenditures (which you’ve just pared down) and determine how much you have left for food and the fun stuff. If things are still looking pretty tight, you might need to consider a few extreme budgeting measures.
Permission to Spend
Once you can see your financial big picture, you can give yourself permission to spend on some of the extra things. And don’t just blow that cash, spend it wisely. Hit up the big sales around town. Make a wish list and then shop around for the best price. You’ll have less guilt and get more mileage out of each dollar.
Stay tough. Remain focused. Make conscious decisions about where your money is spent. It’s not hard, and your bank account will thank you.
Taking advantage of online coupon codes to help you save money on the things you need. Also look out for free offers to really help you stretch your dollars.
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