Real Estate with Dallice – Tracking and Saving Money
I grew up in a modest household. My parents were disciplined and wise when it came to saving money. I couldn’t be more grateful they taught me the following 3 lessons:
- It’s not how much you earn, it’s how you spend it that matters.
- Don’t spend it unless you have it.
- Habitually save a portion of every pay check.
Now, I get that not everyone’s parents were good role models with money or even thought to teach basic budgeting to their kids. That’s too bad, in my opinion, but not the end of the world by any stretch. You are an adult now and have the capacity to learn and change. So stop blaming your upbringing and let’s begin:
To make healthier financial decisions you’ll go on a diet of sorts. Small changes repeated over time are much better for you than binge dieting and the results are longer lasting.
You know you are not doing a good job with your diet when the scale says you put on another 10lb and your doctor tells you the extra fat around your middle puts you at risk for heart disease.
You know you are not doing a good job with your money when the bank balance is low and your accountant tells you the IRS wants to talk to you.
Step 1: Get a little notebook and TRACK all that you spend. I’m serious. If you paid .50 for parking, write it down in a little notebook. Write down ALL items purchased or money lost or given away.
You might choose instead to track using an app on your phone. I downloaded (FREE) Smart Receipts and use that to take pictures of receipts and record spending.
Step 2: At the end of the month tally up all you spent and compare it to what you earned. Was there money left over at the end of the month…or was there month left over at the end of the money? Be honest with yourself, it’s the only way this works.
Step 3: Take a good look at your spending habits. It’s time to decide what is necessary and what is unnecessary. Health insurance, mortgage, car payment, fuel, utility bills. Necessary. Starbucks, magazines, taking the toll road, eating lunch out every day, pretty shoes to match pretty top, regular pedicures and (gasp!) Cable TV… NOT necessary.
Step 4: This month, you will cut a few unnecessary items from spending to save $25/week. Pack a lunch or eat out cheaper, cancel a magazine or cable subscription, make coffee at home. Don’t buy that pair of shoes or newest gadget or blah-blah unnecessary household item. Add budget brands to the grocery cart. Drink water instead of soda. Do what it takes!
Trust me, in a month you wont even remember most of the stuff you decided to give up. With that in mind, take away a couple more things next month. And use some of the money you have saved to pay down credit card debt. This will save you more next month (and begin building your credit score back up).
Step 5: Transfer that $25+/week into a separate savings account. Ok, at this point you have probably done the math and realized that you are saving $100+/month. You might have also lost a pound or two if that money was gained by eating and drinking healthier. Congratulations!
What is most important here is the HABIT. You are changing your ways. Over time it will put you in a position of having greater options.
- More down payment and/or the ability to afford a bigger mortgage payment = better options to buy.
- Less credit card debt or car payment obligations = lower interest rate and/or opportunity to borrow more money for the new house.
You will also find that you gain the confidence of a person who is back in control. This is an awesome side effect!
Step 6: VERY IMPORTANT. Reward yourself. A little positive reinforcement is great and you deserve it. But much like blowing all the good work you did on your diet by rewarding yourself with a whole chocolate cake, you need to be sensible about the reward here. Buy yourself something lovely and unnecessary but stick to a predetermined budget. I’d recommend something like a pedicure if that was a guilty pleasure you have given up, or go to a movie with a friend, or out for dinner with your hubby…. Not anything that just racked up credit card debt or requires a payment plan!
Day 4 complete! Thanks for sticking with me. Very few of these posts will be such a calls to action as this one is, don’t worry. 🙂
Now… Go find a little notebook or app and feel free to email me (Dallice) when you are struggling, feel accomplished or have questions. I’d love to hear about your journey.
My next post will look at credit scores. We’ll have yours improved in a month!