January is the start of a new year, a blank page to re-write your destiny. Instead of making resolutions that won’t last, this year devise a plan to help you reach your goals, whether they are financial, health related, or personal.
I know nothing is more difficult than that first step…acknowledgement. Admitting you have something that needs to be changed is often the barrier that holds you back. For instance, with debt the root cause is most likely bad habits you have developed over time that have created the problem. Admitting to yourself is the crucial first step to developing a plan and sticking to it.
So let’s get started addressing those bad habits!
If you are like me this is a huge area for improvement. Fast paced living leaves everything to last minute decisions, some of which may be affecting your bottom line.
For example: What running late in the morning could cost you…
No time to make your coffee at home, so you grab a $3.00 Starbuck’s on the way to work.
No time to pack lunch, so you spend $7.00 eating out. (Certainly can’t be good for your waistline either.)
No time to consider making dinner. As a result you hit up the grocery store carry out counter or worse a drive thru dinner for your family ringing in at $20.
Lack of proper planning has cost you a whopping one day total of $30 you most likely haven’t budgeted for. The slippery slope begins and by week end you are relying on credit cards to make it until pay day.
Look at the Facts
Take the time to create a budget if you don’t already have one. While a budget won’t keep you from spending unnecessarily, it gives you the “smack in your face” reality of your true financial situation.
Fixed expenses are well, fixed and there isn’t a whole lot you can do to say, lower your mortgage or car payment, but variable expenses are another story. Many of us have opportunities to cut back on variables, such as food, clothing, and entertainment.
The best way to make a change is to see the facts in black and white. Take a few weeks to track every dollar you spend, the process can be a real eye opener.
For example: A month of expenditures like this:
$3.00 daily coffee – $66.00
$.75 daily paper – $16.50
$7.00 lunch – $154.00
$1.00 afternoon soda – $22.00
$.75 snack from the vending machine – $16.50
These are all relatively small daily expenditures, but when you add them up you’ll see that you spent $275.00! Imagine if you planned properly and that $275 was still in your account at the end of the month? You could pay off a credit card… Save for a much needed vacation…or sock it away for retirement… Instead the $275 is gone and you are left wondering where did it go?
A Plan in Action
Once you determine where your money is going, you have to develop a plan that works for you. In these examples there are a few steps I see that you could take to fix out of control spending.
- Invest $30-$40 in a programmable coffee maker and a travel mug, so your coffee is ready when you wake up.
- Make your lunch the night before and bring it to work, better yet take leftovers.
- Bring your own afternoon soda and snacks from home.
As you can see, once you’ve identified the weaknesses in your budget and the habits that are causing you to waste money, it’s relatively easy to come up with a solution.
Keep it Real
The reason many people have difficulty sticking to resolutions is because they set the bar to high from the get go and then expect magic to happen. Stick to the basics; admit you have bad habits, get organized, look at the facts, and then develop a plan that allows for adjustments along the way.
Remember you didn’t get in debt or out of shape overnight and you are not going to fix the bad habits that got you there overnight either.
By taking a simple planning approach instead of your annual new years resolutions, you can greatly increase your chances of reaching your goals no matter how large or small.