February is here and it’s a time of year when our bank balances are looking less than healthy post sales and silly season festivities. Which makes it a perfect time to give your finances a detox and commit to some some financial resolutions for the rest of the year.
This could be setting specifics like have $x by December 31 2015, pay off all debt, save enough for that thing you really want or just generally become better with your money. Any step you take is a good one, so here’s some advice on how to get one foot in front of the other
You can’t change something if you don’t know what’s really going on. How many times have you been paid and two weeks later spent it all with no idea how?
Download a money tracking app. Our absolute favourite is Pocketbook, which accesses your accounts and shows your income vs spending, then breaks down that spending into categories. Didn’t realise how much money you spent at Priceline? Well, now you do. So stop it.
Set yourself up with a good budget template. Throw all your digits in with only necessary spending (budgets don’t have an ‘Emergency Shoes’ column) and crunch your numbers real good. You may be surprised with how much you should end up with at the end of each month. Burn that number into your brain and use it as the red line you can’t go past.
This is the hardest part. This is the time we say goodbye to daily lunches out. We’re not saying completely deprive yourself, let’s be realistic, it just means making some good substitutions.
Instead of coffee, bring your own herbal tea to work (it’s better for you too) and bring your lunch to work. Track how much you save over a two week period and we guarantee you’ll be impressed. Then keep it up.
Another way to trim the financial fat is consolidating everything…Super…Bank accounts…Insurance. Roll them over to one account or provider to cut down on fees and bank up that interest.
Aforementioned interest goes both ways my friend. We want the good kind not the bad, and the bad comes from debt. Before you can save for anything you need to pay off what you owe. That’s credit cards, loans, cars, whatever your fiscal vice may be.
Use the monthly surplus from your budget to pay off your debt by setting up a direct debit the day you get paid so you almost don’t even realise its money you’re missing. For extra motivation, work out how long this will take based on your monthly contributions and mark it in your calendar.
Doing something hard is even harder if you don’t have an end goal, so use your new grown up ways to work towards something. Whether it’s a holiday, car, investment or deposit for a home, keep it at the front of your mind.
Make it the wallpaper on your computer and phone, put it on a post it on your screen, or most aggressively, write it on a piece of paper and sticky tape it to your debit/credit card so every time you whip it out to spend some cash you are reminded what end you’re stealing from. Here’s a worksheet that can be really useful for re-setting financial goals.
So there you have it. Go forth and literally and/or figuratively prosper.