Does looking at the balance in your bank account make you cringe? Do you want to be more frugal, but just can’t figure out how people do it between the hustle and bustle of daily life?
With a little front end work, you can get better with money. Here are some tips to get you started.
What do you want out of life? Maybe you want to retire comfortably. Maybe you want to buy a house, get out of debt or go on a family vacation every year. Maybe you just want to be able to afford that really cute pair of shoes.
Whatever your goals are, write them down. As you do so, make sure they’re SMART.
It’s okay if your list of goals is lengthy. Once you have them all written out, though, you’re going to want to prioritize them. This will help you identify what’s really important to you so you can allocate most of your time and resources there. It will also help you when you are facing making an impulse or convenience purchase. Maybe it would be really easy to order in Chinese food instead of cooking dinner tonight, but is that more important than saving for your trip to the Bahamas? When you enter this way of thinking, it makes it easier to make better decisions with money.
Evaluate What You’ve Got and Where it’s Going
This can be one of the hardest steps. While making goals and prioritizing is all about what you want, evaluating where you are can be like reality slapping you in the face. Don’t stop here, though. Knowing where you are will help you figure out creative ways to actualize your prioritized goals.
Sit down with your bank statement. Your pay stubs may come in handy, too. Add up how much money you have coming in every month. Then look at what you’re spending it on. Things like rent or mortgage payments have to stay. But you may be able to negotiate or eliminate other bills. You could cut the cord for cable. Or you could switch to a lower-cost carrier like Cricket Wireless (who now runs on the AT&T network.)
Then there will be other spending that isn’t necessary at all. You might eat out so much that it’s inhibiting you from reaching your goals. You may make too many impulse purchases when really you just went to the store to buy your daughter some new jeans. Look your bad habits straight in the face so you can make the decision about what to do next time before you even find yourself in the same situation again.
Monitor Your Progress
Some goals are big and won’t feel like quick wins. To keep yourself motivated, make a visual progress chart for yourself. It could be a classic thermometer with the mercury rising with each bit of savings. It could be a drawing of what you want, with chunks colored in as you meet certain milestones. (Fifty saved for those cute shoes? Go ahead and color in the heel!)
Keep this somewhere you will see it everyday. Having that visual reminder can help you stay on track with your priorities, and make sure the money is going where it really matters to you.