Here Come the Holiday Bills!

3 Steps to Help You Attain Your Financial Goals

The start of the new year can be a downer when it comes to managing our finances as all the holiday bills arrive on top of our regular household expenditures. It’s a good time to take stock and establish a household budget so you can rest easier and be in a more secure financial position in 2011. There are three simple steps to get started:

1. Set your goals.
2. Track your expenses.
3. Establish a spending plan.

 Set your Goals
Are you saving for a down payment for a house? Do you want to pay off your student loan? It is much easier to stick to a plan if you have a goal in mind. Without goals, it is easy to be swayed into compulsive spending. Establish short, medium and long range goals.

Track Your Expenses
Write down every item you spend money on. Use our pocket spending tracker. Make sure you include irregular expenses such as maintenance costs, vehicle repairs, dentist, clothing, insurance. Estimate annual amounts for irregular expenses and divide by 12 to determine the monthly amount to set aside. Don’t forget those little items like hair cuts, newspapers, school expenses, bank fees.

Once you’ve seen where your money goes, work with the goals you’ve established to prioritize your spending.

Establish a Spending Plan
Develop a realistic budget using the following guidelines.

• Your basic needs must be met first: shelter (rent, mortgage), food, utilities.
• Don’t spend more than you make.
• Include savings as a part of your budget. (10% of your income would be great, but even 2% tucked away will help in emergency situations).
• Pay your bills on time to avoid costly interest fees.
• Use credit wisely. Don’t put money on your credit card, if you don’t have it in the bank.
• Keep track of what is in your account. Record when you use your debit card to pay for things.
• Take advantage of our Monthly Budget Guide  as a tool to help you set up your budget.
• Review your budget plan and re-evaluate your spending patterns regularly.

Establishing a budget isn’t a tool to judge yourself, but is a proactive step that will help you take control of your finances.

If you have some good tips to help reduce spending, please share your comments.