Please take a moment to watch this short video called “I’m Putting up The Flag”. I watched it this morning and it brought tears to my eyes.
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Does this sound familiar? You are finally getting comfortable with your budget and are living within your means and then all of a sudden something breaks, someone gets sick or some other unexpected expense shows up and is ready to wreak havoc on your personal finances.
Let’s take a look at how we can deal with this situation – no matter what the unexpected expense is for without totally blowing our budget.
There are two basic scenarios I want to look at. The first is what to do if you’ve already build up some emergency savings, the second what to do when you’re not at that point yet.
It’s Thursday and time for another Tight-Fisted Thursday post. Let’s have a little chat about making and then sticking to savings goals. Doing this and then going back and reviewing your savings goals on a regular basis is the most powerful thing I know of that helps me keep more of my hard-earned money on a regular basis. Let’s get started…
Where Are You At?
To build good savings habits is really only a simple matter of actually doing something instead of doing nothing. So, start where you are. For example, at the end of each day, empty you wallet and pockets of any change you accumulated during the day, and put it in a jar. Deposit this money monthly into a savings account.
Another option is to skip on one coffee a day, and put a dollar aside instead. At the end of the month, this will amount to roughly $30 to deposit into that savings account. After an entire year of doing this, you will have saved an approximated $360!
Think about where you spent money on a regular basis and what you can change to save just a little bit here and there. Is there a phone or utility bill you could reduce? Could you move to a smaller cable package, or cut it out all-together? My big weakness are books and magazines. I love to read and could easily spend a hundred dollars on those each month. Instead I make myself check books and magazines out at the library and deposit those savings into an account.
What Are Your Spending Habits?
Many people typically spend approximately $5 eating out several times a week at the office cafeteria. If you were to reduce this to only once or twice a week, you could take the extra five dollars from the days you don’t spend it, and deposit it into your savings account.
The same scenario can be used once you finish paying off your car or student loans. Once the actual loan has been paid in full, continue depositing the same amount in your savings account every month.
You can do the same when you get a raise. You’ve lived just fine on your old-income before. Take at least half of the extra money you are making now and stick it into a savings account.
Are You Setting Yourself Up For Success or Failure?
In the beginning it’s hard to stick to your savings plan. It would be so much more fun to just “blog” that extra cash on some fun stuff for you or the kids. The best way to get over this and make saving a lifelong habit, is to experience some small successes along the way. Believe me, positive reinforcement works as well with us as it does with the kids. Start out by picking short-term, easily attainable goals which will give you a sense of personal satisfaction from the start.
For example, your goal might be a new stereo or paying off a credit card balance. Determine what those goals will cost, and give yourself a deadline for achieving them. Then all you have to do is just do it – begin by setting aside the right amount of money as per your schedule, and stick to it. Before you know it, your goal will have been reached.
Do I Need This Or Do I Want This?
At some point or another we all have the urge to splurge or pamper ourselves. Of course it’s nice to treat ourselves to something new every now and again. Before making any purchase, however, remember to take the time to consider these questions: “Do I need this?” and “Does this help me achieve my savings goal?” As a rule this will help you make the appropriate decision and stay focused on your goals before making a purchase.
A good way to avoid impulse buys is to just put it off for a day and sleep over it. (Of course this doesn’t work when you need milk for the kids or diapers for the baby). But before you buy something nonessential, make yourself wait until the next day and see if you still really want it bad enough to take that money away from reaching your savings goals. You’ll be surprised how often that new blouse or the toy you just had to get for the kids don’t seem as appealing anymore once the first impulse to buy is gone.
Are You Monitoring Your Expenses?
You may want to sit down at the end of each month and review all of your expenses. There may have been areas you didn’t consider before, but by seeing them on paper you realize they are part of what needs to change for the next month. This is yet another good reason to set up and keep a monthly family budget.
Are You Sticking To Your Plan?
The most important point in any savings plan is to stick with it. Some people find it helpful to keep their goals in writing. Writing down the amount you need as well as the date you expect to achieve your goal gives you something concrete to focus on. With long-term goals, such as saving for retirement, you may find it helpful to establish milestones you can celebrate along the way.
Are You Thinking Big Enough?
Big-time savers use an “I can” attitude while thinking long term. By exercising discipline now you can see rewarding paybacks later on. Saving can make the world of difference not only for yourself, but for your children as well. Starting to save today means less to worry about tomorrow.