You say you know where your money goes and you don’t need it all written down to keep up with it? I issue you this challenge. Keep track of every penny you spend for one month and I do mean every penny.
You will be shocked at what the itty-bitty expenses add up to. Take the total you spent on just one unnecessary item for the month, multiply it by 12 for months in a year and multiply the result by 5 to represent 5 years.
That is how much you could have saved AND drawn interest on in just five years. That, my friend, is the very reason all of us need a budget.
If we can get control of the small expenses that really don’t matter to the overall scheme of our lives, we can enjoy financial success.
The little things really do count. Cutting what you spend on lunch from five dollars a day to three dollars a day on every work day in a five day work week saves $10 a week… $40 a month… $480 a year… $2400 in five years….plus interest.
See what I mean… it really IS the little things and you still eat lunch everyday AND that was only one place to save money in your daily living without doing without one thing you really need. There are a lot of places to cut expenses if you look for them.
Set some specific long term and short term goals. There are no wrong answers here. If it’s important to you, then it’s important period.
If you want to be able to make a down payment on a house, start a college fund for your kids, buy a sports car, take a vacation to Aruba… anything… then that is your goal and your reason to get a handle on your financial situation now.
Sunday, September 25, 2011
The Budget – The Ultimate Financial Management Tool
A carpenter uses a set of house plans to build a house. If he didn’t the bathroom might get overlooked altogether.
Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.
Not very smart of us, is it?
A money plan is called a budget and it is crucial to get us to our desired financial goals.
Without a plan we will drift without direction and end up marooned on a distant financial reef.
If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.
Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.
A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.
Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in “free budget forms”.
You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.
Rocket Scientists would never begin construction on a new booster rocket without a detailed set of design specifications. Yet most of us go blindly out into the world without an inkling of an idea about finances and without any plan at all.
Not very smart of us, is it?
A money plan is called a budget and it is crucial to get us to our desired financial goals.
Without a plan we will drift without direction and end up marooned on a distant financial reef.
If you have a spouse or a significant other, you should make this budget together. Sit down and figure out what your joint financial goals are…long term and short term.
Then plan your route to get to those goals. Every journey begins with one step and the first step to attaining your goals is to make a realistic budget that both of you can live with.
A budget should never be a financial starvation diet. That won’t work for the long haul. Make reasonable allocations for food, clothing, shelter, utilities and insurance and set aside a reasonable amount for entertainment and the occasional luxury item. Savings should always come first before any spending.
Even a small amount saved will help you reach your long term and short term financial goals. You can find many budget forms on the internet. Just use any search engine you choose and type in “free budget forms”.
You’ll get lots of hits. Print one out and work on it with your spouse or significant other. Both of you will need to be happy with the final result and feel like it’s something you can stick to.
Rebates – Reward or Rip Off?
Rebates have become increasingly popular in the last few years on a lot of items and certainly on electronic items and computers. Rebates of $20, $50 or $100 are not uncommon.
I’ve even seen items advertised as “free after rebate”. Do these rebates come under the heading of “too good to be true”? Some of them do and there are “catches” to watch out for but if you are careful, rebates can help you get some really good deals.
The way a rebate works is that you pay the listed price for an item then mail in a form and the bar code to the manufacturer and they send you a refund thus reducing the price of what you paid for the item except with a time delay of several weeks.
Rule #1. Rebates from reputable companies are usually just fine.
You can be pretty sure you will get the promised rebate from Best Buy, Amazon or Dell but you should probably not count on getting one from a company you’ve never heard of. If you really want the product and are OK with paying the price listed then buy it but don’t count on actually getting the refund.
Rule #2. Check rebate expiration dates.
Many times products will stay on the shelf of a retailer after the date for sending in the rebate offer has expired so check that date carefully.
Rule #3. Be sure you have all the forms required to file for the rebate before you leave the store.
Rebates will almost always require a form to be filled out, a receipt for the purchase and a bar code.
Rule #4. Back up your rebate claim.
Make copies of everything you send in to get your rebate including the bar code. Stuff gets lost in the mail all the time and if the rebate is for $50 it’s worth the trouble to back up your claim.
I’ve even seen items advertised as “free after rebate”. Do these rebates come under the heading of “too good to be true”? Some of them do and there are “catches” to watch out for but if you are careful, rebates can help you get some really good deals.
The way a rebate works is that you pay the listed price for an item then mail in a form and the bar code to the manufacturer and they send you a refund thus reducing the price of what you paid for the item except with a time delay of several weeks.
Rule #1. Rebates from reputable companies are usually just fine.
You can be pretty sure you will get the promised rebate from Best Buy, Amazon or Dell but you should probably not count on getting one from a company you’ve never heard of. If you really want the product and are OK with paying the price listed then buy it but don’t count on actually getting the refund.
Rule #2. Check rebate expiration dates.
Many times products will stay on the shelf of a retailer after the date for sending in the rebate offer has expired so check that date carefully.
Rule #3. Be sure you have all the forms required to file for the rebate before you leave the store.
Rebates will almost always require a form to be filled out, a receipt for the purchase and a bar code.
Rule #4. Back up your rebate claim.
Make copies of everything you send in to get your rebate including the bar code. Stuff gets lost in the mail all the time and if the rebate is for $50 it’s worth the trouble to back up your claim.
Avoiding Impulse Spending
Answer these questions truthfully:
1.) Does your spouse or partner complain that you spend too much money?
2.) Are you surprised each month when your credit card bill arrives at how much more you charged than you thought you had?
3.) Do you have more shoes and clothes in your closet than you could ever possibly wear?
4.) Do you own every new gadget before it has time to collect dust on a retailer’s shelf?
5.) Do you buy things you didn’t know you wanted until you saw them on display in a store?
If you answered “yes” to any two of the above questions, you are an impulse spender and indulge yourself in retail therapy.
This is not a good thing. It will prevent you from saving for the important things like a house, a new car, a vacation or retirement. You must set some financial goals and resist spending money on items that really don’t matter in the long run.
Impulse spending will not only put a strain on your finances but your relationships, as well. To overcome the problem, the first thing to do is learn to separate your needs from your wants.
Advertisers blitz us hawking their products at us 24/7. The trick is to give yourself a cooling-off period before you buy anything that you have not planned for.
When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home.
If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without. By following this simple solution, you will mend your financial fences and your relationships.
1.) Does your spouse or partner complain that you spend too much money?
2.) Are you surprised each month when your credit card bill arrives at how much more you charged than you thought you had?
3.) Do you have more shoes and clothes in your closet than you could ever possibly wear?
4.) Do you own every new gadget before it has time to collect dust on a retailer’s shelf?
5.) Do you buy things you didn’t know you wanted until you saw them on display in a store?
If you answered “yes” to any two of the above questions, you are an impulse spender and indulge yourself in retail therapy.
This is not a good thing. It will prevent you from saving for the important things like a house, a new car, a vacation or retirement. You must set some financial goals and resist spending money on items that really don’t matter in the long run.
Impulse spending will not only put a strain on your finances but your relationships, as well. To overcome the problem, the first thing to do is learn to separate your needs from your wants.
Advertisers blitz us hawking their products at us 24/7. The trick is to give yourself a cooling-off period before you buy anything that you have not planned for.
When you go shopping, make a list and take only enough cash to pay for what you have planned to buy. Leave your credit cards at home.
If you see something you think you really need, give yourself two weeks to decide if it is really something you need or something you can easily do without. By following this simple solution, you will mend your financial fences and your relationships.
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