Finding focus when your finances are out of control.

Are your finances completely out of control? Are you spending more money every month?

Savings. You should have at least one month of income saved to your savings account. It is important to plan ahead for emergencies. The first step to being able to get your finances in control is to plan ahead for emergencies. When you have things come up, it is so much easier if you have a plan and a savings fund. While you’re building your savings account, make sure you are staying current on your credit payments.

Debt. Now, that you have some money put aside for emergencies, you can shift your focus to your debt. You are going to pick one debt to work on a time. Then, you will use the snowball method to pay off your debt sooner. To pick your first debt, you can choose the smallest balance or the largest interest rate. Most people say it is best to start with the largest interest rate. But, if you start the smallest balance, you can see your effort sooner. So, I prefer to start with the smallest. Hopefully, you have a small debt that you can pay off within a few months. Then, you take the payment you were making to this debt and add it on to your next debt. Make a simple spreadsheet in google sheets to see your efforts.

Retirement. Retirement savings is very important. The sooner you start putting money away for retirement, the more money you will accumulate in your retirement account. However, if you’re spending more money than you are currently making, retirement savings is not the smartest route for you. Get a good savings account started and pay off a lot of your debt, then start saving for retirement.

Staying focused on one of these areas is the very best way to get control of your finances. Once you start to have control in one of these areas, be proud of yourself. Even if you’re not where you want to be, you are still doing great by staying focused and achieving one goal.

I always compare it to losing weight. One area is like ten pounds. You can’t expect to lose fifty pounds in a month. In the same way, you can’t expect to turn your finances around in a week. It takes long, focused effort to lose weight and control finances.





Budget – Where do I start?

Just like a diet, crash budgets do not work. You should start out a budget slow. I want you to look at one month and commit to changing some habits for one month. Evaluate your spending first. Then, decide what area you want to work on.

  1. What is your focus? I will always talk about this. You need to notice one particular area that you want to work on. You will see more progress if you focus on one area of your finances at a time instead.
  2. What category of spending could you cut back on? I want you to find ways to cut back on your overall expenses by 10% for the first month. Do you spend too much at the grocery store? or on coffee/drinks? or eating out? I’m not saying you can’t continue to enjoy those things but if you have long-term goals you need to cut back for a time.
  3. Use the extra money as soon as you receive it. If you’re planning to put $50 in savings or pay $50 extra on your debt from a paycheck, you should do it as soon as you get paid. Online transfers and online bill pay make it easy to send extra payments as soon as you have the money.
  4. Use the cash envelope method to manage overspending. If you struggle with just spending the money on your credit/debit card, the envelope method works well. You take the money for each spending category out of the bank and put it in an envelope. When the cash in the envelope is gone, you don’t spend any more money.

Always keep your focus in mind, cut back a little, use the extra money as soon as you receive it, and then use the cash envelope for not overspending. Don’t try to say you’re not going to enjoy things or spend any money until you pay off debt, build savings, etc. Putting too many restrictions on yourself especially if you’ve been overspending, will make it very difficult to stick with a new plan.

I offer budget evaluations for free for a limited time. I love to help people get their finances back on track. I will make a spreadsheet that shows you how much you’re actually spending in each area. Just seeing where your money is going is the first step towards changing your financial outlook.

Budgeting, expenses, Tips

Starting a budget.

In a poll of New Year’s Resolutions for 2018, 37% of people said they would include saving more money this year. If that includes you, and you haven’t done anything now is the time to start. So, where is the best place to start?

  1. Start by looking at your expenses for the last two to three months. Make categories for different types of expenses. Open a google sheet or spreadsheet and start entering the amounts spent in each category. This will show you where you are spending your money.
  2. Calculate the total for each of your different categories. You can have a lot of categories or just a few.
  3. Evaluate which categories you could cut back on. Is it eating out, coffee in the morning, grocery store or just shopping in general? Planning to cut back is the first step in organizing your budget.
  4. Find a focus. Decide what your focus should be for your finances. Do you need to pay off debt, establish a savings account or start retirement savings? Focus on one area at a time. Take the cutbacks you calculated in step three, and put any extra money into your focus area.

When I am focused on debt, I like to make a chart that shows my progress month to month. If financial security is your goal, you should always start by making a measurable and attainable goal. I believe in working on your financial goals a little at a time. So, start by creating a plan.

I offer budget evaluation services for as little as $50. Contact me today to discuss your options.