Wrestle Your Money To the Floor And Make It Behave

Do you have trouble managing money and making it do what you want it to do? Learn how to wrestle your money to the floor and make it work for you.

LendingTree.com conducted a nationwide poll that measured attitudes about consumer loans, credit card debt, credit scores, savings and financial plans.  It was alarming that 48% of the respondents were uncomfortable with their household debt. Even more alarming was that 54% admitted they have no financial plan to become debt free. This clearly establishes the need for people to learn how to manage their debts.

The way money works in your household is more about emotion than about math. Financial advice needs to be written for humans, not robots. Life has unexpected events that you can manage and plan for.

Budget

You may have heard this a thousand times and you’ve either given up on the idea or you’ve found a way to budget that you can live with. One way to budget is to take a piece of paper and write your total monthly income. Under that write down all of your expenses in categories and guess what amounts they each are. Total this amount. Make sure your income and expenses are totally equal. You want to spend all of a month’s income on paper before the month starts. Spend all of it on paper. Don’t forget that savings is a category. Now you have ordered your money to behave because each dollar has a job to do.

Allow for Mistakes

You are going to make mistakes the first time. Don’t worry about that. You will get better and better at estimating your expenses. With practice your budget will become one of the most powerful tools available to you to keep your finances on track.

Dump Debt

Debt is your largest obstacle to financial security. Think about your current beliefs about debt other than your house and car. Debt is not something you just have to live with. Many people live debt free. So can you.

If you are living on borrowed money you can prevent digging a deeper hole for yourself.  Mitlon Berle said, “It’s amazing how fast later comes when you buy now!  Just stop using any borrowed money, which of course will include your lines of credit. Don’t close your accounts because there are situations that you need a credit card. Renting cars, securing a hotel or paying for a vacation will need some kind of credit. When you use them for that purpose and keep your balance at zero, then you are doing great.

Save Money

Saving and investing are two of the best things you can do with your money. If you watch the Suze Orman televsion show, you might think that everyone in the country may be better off than you are and that everyone has over $300,000 in savings for retirement.  Well, take heart, because there are people who have no savings at all and who find it hard to save. Start with a small amount if you are having difficulties making ends meet. As your income grows and your expenses lower, then you can save more. Make it a habit to do this on a monthly basis.

“The safest way to double your money is to fold it over once and put it in your pocket.”
~ Kin Hubbard

Garage Sales

Get rid of items that you no longer need. Not only will you  get some added income, but you will have more space to live.

Automatic Deposits

Use automatic deposits into your savings account. Sometimes it is less painful for people to save money when you don’t have to decide to do it every month. You make a decision once and then set it on auto-pilot. In six months to a year, you’ll have a nice amount of money saved.

“Money can’t buy you happiness but it does bring you a more pleasant form of misery.”
~ Spike Milligan

Developing and Using a Budget

It might be very easy for you to make money but being careless in handling it might cause you to end up with nothing at all. What you need to do is write down a plan of  where and how your money will be spent. If you fail to do this, then you are inviting debt into your life and no one wants that. Here are some basic steps to budgeting your money.

You must know that the more basic your plan will be the better. When you make a list of planned expenses, the first thing to remember is to keep it very simple. You must list the typical things that you and your household needs to run smoothly. List your normal fixed expenses such as house or rent payments,  gas, electricity, water, telephone and any recurring bills.

List all money that will be coming into your account including your interest income, paychecks, child support, alimony and other costs. Doing this will help you become an effective budgeter.

After writing down the amount of money from all of your income sources, you must then identify your other expenses. This can be hard. You know why? Your expenses might change from month to month. You might have expenses you are not aware of. Create a miscellaneous category and try to guess what amount you will be spending.

You must have a good estimate of your monthly expenses  including the cost of gas, food, as well as utilities. The categories must include all areas where you typically spend money.  You will soon see where most of your money is being spent. Sometimes you will want to create sub-categories.

Some banks offer online services that automatically put your expenses in categories for you so you can easily see what you have spent your money on. This makes budgeting extremely easy.  In one glance you can see what you have spent on restaurants, which with the popularity of fast food and the great restaurants available now, make this one category that can be embarrassingly large. You can also set up categories that you most commonly use and customize your budget.

By budgeting and having your expenses written down somewhere or at least available to you online, you will be able to know where your money is going.  Analyze what you are spending for several months and it will soon become clear to you where you can cut back and how much money you can set aside for things you really want to have. Saving your money for doing something fun with your family or getting something you’ve always dreamed of is much easier when you have your budget planned and you set aside a certain amount of money every month.

Don’t stress out if you haven’t yet created a budget or you aren’t used to using one. You can always change your life by starting today to create a budget that will help you achieve your financial goals. You’ll be much happier in the long run and have much more satisfaction in being able to do the things you’ve always wanted to do.

Living and Saving in the Moment

My three year old son loves to go to the grocery store with Mom and Dad. He wanders around with us, listening to our discussions about which products to buy, and quite often expresses his own opinions. He’ll remind us that he loves V8 Fusion (our preferred fruit juice, since it’s 100% and also is half vegetable juice) and often dallies for a long time near the Pepperidge Farm goldfish crackers, as I noted two years ago (and depicted as well):

As we shop, we make tons and tons of little decisions along the way. Those decisions, on their own, seem inconsequential.

Should we buy the bulk can of diced tomatoes or the smaller can?

These tortillas feel softer, but they’re way more expensive – is it worth it?

The free range whole chickens are on sale! Should we stock up?

A choice one way or another here might save us a dollar or cause us to spend a dollar more. In the eyes of many people, it’s an inconsequential decision – just make it and keep going. One dollar doesn’t make a huge difference, right?

The problem is that each little buying decision you make is deeply tied to other buying decisions, whether consciously or not.

How so, you might ask?

All of our buying decisions are based on a set of principles in our head, ones that are often so well-grounded that they don’t even pop up in conscious thought.

Here’s a thought experiment to help you see what I mean. Imagine a product you would never buy in a grocery store – pork rinds, maybe, or perhaps insanely potent hot sauce. Now, what about that product would cause you to not buy it? You’re likely to pop up an immediate simple answer – I don’t like the taste or it’s unhealthy – but on other purchases, you’re quite willing to overlook that principle for other reasons.

In truth, when we make a decision to buy in the grocery store, we’re trying to reduce a big set of principles and inputs down to one split-second decision. And often we feel we’re completely justified in that decision – and we move on with life.

It is very easy to tease apart each little buying decision, tell yourself that it doesn’t really matter that much and that it’s okay to splurge, and then essentially ignore your final tally when you get to the checkout because each decision was justified in your mind. Doing that, though, is a game that will, time and time again, put your wallet in the hurt locker.

So, what can you do to overcome this problem?

The easy methods are the shopping list and the meal plan. Making a shopping list in advance of your visit to the grocery store simply serves to reduce the number of decisions you have to make. This, of course, leads you to making fewer bad decisions.

But that’s just the start. Once you’re in the store with your shopping list in hand, commit to three more things.

First, simply do not put anything in your cart that’s not on your list. Your list, if it’s thought out at all, should have everything you need for your meals for the next week. If you see something you feel like you need or deserve, jot it on the back of the list for next time.

Second, mark any items that you’re not simply searching for the cheapest version of. On our list, I like to put a little X by any item that I don’t intend to just buy the cheapest version of. For example, with diced tomatoes, the various brands and cans are identical in terms of ingredients, so we usually just get the cheapest version. This, again, reduces the number of opportunities for poor impulse decisions in the store.

Third, if you have specific brands in mind (because of coupons or because of previous buying experiences), put those on your list, too, along with the size. For example, we usually have a big stack of coupons for V8 Fusion (100% juice, half fruit and half vegetable). So, instead of just writing “fruit juice x 3,” I’ll write “46 oz. V8 Fusion x 3? on the list. In other words, if you make the list more specific, you further reduce the number of potential impulse decisions in the store.

Using all of these techniques, you’ll end up making just a handful of in-the-moment choices in the grocery store – and with fewer potential decisions, you have fewer chances to make poor ones. The end result? A cart full of items that you actually want and a much smaller grocery bill.

By The Simple Dollar