Christmas is undoubtedly the season of giving, but it is also the season of spending. By the time the New Year rolls around many people are desperately looking to get their budgets and bank accounts back into a presentable manner. If one of your New Year's resolutions is too budget your money better than in previous years, then you are in luck as Latin Times has received some much needed advice from Coupon.com's Saving Expert, Jeanette Pavini.
Pavini's tips are simple and necessary and begin with the one most important processes of any new start—reflection. As we head into 2016, now is the time to focus on your finances and set up a reliable budgeting system to help you better prepare for your future. Check out Pavini's eight steps for keeping your finances and budgeting resolutions on track, and 2016 may be your most profitable year yet!
Take financial inventory. Before you can really dig into your budget, you need to know where you stand financially. Calculate the difference between your monthly income and your monthly fixed spending (mortgage, insurance premiums, car payments). Decide how much of that difference you would ideally like to save each month. Whatever is leftover goes to variable spending, in other words, areas of the household budget you have some control over like clothes, entertainment, and even groceries. That’s where the real wiggle room in your budget is.
Track your daily spending. Once you have the overall picture of your financial situation, it’s time to dig in and see where that variable spending is going on a daily basis. Save all your receipts for at least a month and divide them by category, then analyze your spending. I did this exercise with a mom of two and she realized she was spending around $600 a week on groceries. That’s around $31,000 a year!
Set manageable, measurable and specific goals. Hone in on specific categories and cut back, so you canset aside money each month. Create goals for the month or week, rather than the entire year, and continue to build on them. Write them down so you are accountable and acknowledge little victories along the way. Broad goals like I will save $5000 this year tend to lose steam, but breaking it up by month will give you something new to strive for and can achieve the same end game. This month I will call all utility companies and see if I can cut my monthly payment. Next month, I will plan weekly menus around store ads and save $50 a week.
Cut back wisely. Don’t feel like you need to give up the things you love completely. A soy latte 5 days a week might cost you $845 a year. Indulge in your coffee shop treat just twice a week and stick to break room coffee the other three. Annual savings: $507 and you didn’t even have to go cold turkey!
Consider paying with cash: Credit card rewards can work to your benefit, but if you’re having trouble sticking to a budget, consider paying with cash. The old-fashioned envelope system will force you to stick within the spending parameters you’ve established. Delegate a certain amount of money to each spending category like groceries and entertainment, when the cash is gone, that’s it!
Think small and see big results. Little savings add up, so trim the family budget anywhere you can, no matter how minimal it may seem. Start using five, $1 off grocery coupons each week on things you already buy like cereal, deli meat, and pet food. Basically, coupons are free money and in a year’s time, without changing the way you eat or shop, you’ve saved $260 on groceries.
Increase direct deposit to savings. If you have a portion of each paycheck deposited directly into savings, then up that amount by one percent, little enough your probably won’t notice, but big enough to make a difference. If you make $50,000 a year, that’s an extra $500.
Consider using an app to budget. Creating a budget is easy, maintaining it is the hard part. That’s why the ability to track your spending from your phone is so important. That way you can update on the go or from the line at the grocery store! You can choose an app like Mint.com, which connects to your bank account and does it for you. Or, if you like to do things manually, a spreadsheet app like Apple’s Numbers has a personal budget template.
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