In today’s depressing economy, it comes as no surprise that personal finance issues are weighing heavy on the minds of people everywhere. And with the arrival of the New Year, your resolution may be to give your financial life a makeover. Since New Year’s resolutions don’t have a high success rate, avoid falling into the same pattern you did last year (when you went to the gym January 2 and 3rd, never to return again), approach your resolution with a new attitude, and use these following tips for getting your finances on track:
Step #1: Calculate your cost of living.
Take to a notebook or create a spreadsheet on your computer to figure out how much it costs you to live each month. First, tally up your net monthly income from all sources. Then, make a list of the necessary bills you must pay each month plus your regular cost of living expenses: the roof over your head, insurance, car payments, keeping the lights on, groceries, fuel, personal care, entertainment, etc. If you find that your expenses exceed your take-home pay, review which extra expenses are not a priority in your life and eliminate them.
Step #2: Track your spending.
While revamping your financial outlook on life, it is crucial that you write down everything on which you spend money—rent, an oil change, even a candy bar. This can be a time consuming process but it is dire that you stick to it on a daily basis. Save all of your receipts and be sure to journal them into your notebook or spreadsheet. Once you see how the money you have coming in is going out, it will give you an eye opening look at your spending habits…from there you will be able to make adjustments that you see fit and maybe think twice before spending $8 at Starbuck’s every morning.
Step #3: Find the best deals.
There are certain things that you can’t live without, but there are ways to change your habits. You have to buy groceries…but you don’t have to buy them at Whole Foods. Shop around to find money-conscious deals that will coincide with your new budget by scanning the local paper and searching websites for sales and coupons. Consider getting shopper rewards cards to your favorite stores. Take advantages of tools like these and you will find the effort is worth the savings.
Step #4: Cut back.
If you are a compulsive shopper who likes to throw cash around like a rapper in a nightclub and then wonders why you are barely able to survive from paycheck to paycheck, then it’s time to reevaluate your spending habits. When you are out shopping and the urge to buy something totally unnecessary is taking over, take a step back and ask yourself, “Can I really live without these therapeutic foot pillows?” If the answer is yes, then move along.
Step #5: Eliminate debt.
Many people sell their souls to credit card companies and live their lives indebted to them forever. If you’re one of these people or have accumulated other kinds of debt, it is important to get rid of as much as you can. Outline your debts and concentrate on paying off the smallest debt first while making minimum payments on all other bills. As you eliminate your debts one at a time, take the money that you were paying and apply it to the next debt in line.
Step #6: Save, save, save.
Since you are improving your personal finances and cutting back, you may think that you don’t have any extra money to donate to your piggy bank. If so then you’ve thought wrong, my friend. As a part of maintaining a financially responsible lifestyle, it is imperative to have a savings—even if you’re just putting a few dollars aside each week. With money in the bank you can have the peace of mind knowing that a situation will be covered in case the unexpected happens.
Now that you know how to take charge of your financial life, it will take several months to get on track with your plan…but stick to it you must. Once you do, it will be easy to understand the importance of handling your personal finances in a mature manner…and you won’t have another year pass with a wasted resolution.
Erica St. Claire is a guest post author who shares with us this article about achieving success with personal finances. In addition, Erica also owns Christian Singles Dating Sites where she provides resources for safe online dating in the Christian community.