You Need A Budget!

Developing a financial budget for your self or your family should be the starting point of any financial plan. Start by tracking each and every expense you make for a solid month. Afterwards, take your bills, tracking sheet and income statements and see where you are financially. At first glance, it may seem like there literally is nothing left to save. But if you take a closer look and a red pen to your numbers, you will find that cutting out unnecessary items from your daily living expenses will allow you some room to save.

Cut The Fat

Go through your expense tracking sheet very carefully. See where and how you spend your money. If you are eating lunch or dinner at restaurants five days a week, it may be time to start brown-bagging your food at work. Check out how much you are paying in utilities. Be more vigilant about wasting electricity. Condense your phone or cable service to basic plans. Doing any number of things can free up some savings money.

Set Goals

Small and large goals need to be formed as soon as possible. A good start is to put into action a plan for saving for emergencies. This fund can be used when the car breaks down or you need a new roof on the house. Real emergencies arise at any time and having a financial cushion can make it much easier to deal with such trying times. Otherwise you are likely to overextend your credit and acquire even more debts than you have now. Write lists for short and long term savings goals: vacations, insurance, fun money, etc…can be just the start of your goal sheet. As time goes by and you achieve your smaller goals, set new ones and keep moving forward.

Electronic Deposits

If you have a 401k plan at work, elect to have a small portion of your pay diverted into your retirement plan. There is nothing wrong with starting small. Additionally, plan on having, say, $25 from each check deposited into an online savings account (I use ING Direct). As you begin to see funds add up, you’ll likely be motivated to increase your deposits and find ways to cut spending in favor of saving. Following the theory of what you don’t see, you won’t spend so automating your savings can be a sure-fire way to be consistent with your financial goals.

Leave It Alone

The account you choose to use as your primary savings should be researched carefully to ensure you get the best interest rates and set up so that it is used only for savings purposes. As time goes by and the account grows, you should also keep in mind that temptations may arise. An account you don’t have to look at on a regular basis may be a good idea to help you keep from digging into the funds unnecessarily.