Budget Basics
If you religiously save for reoccurring expenses, you can reduce or even stop using your credit card when expenses arrive. Set up several high-yield savings accounts with one online bank and arrange for automatic deposits into those accounts on a regular basis. You can organize a car insurance fund, a holiday gift fund and a vacation fund. Each account will be linked to your checking account at your regular bank. You can transfer money in and out easily online for free. If you automatically save a little money on a regular basis, it doesn't take much to build up a good chunk when your big expenses come due.
Our short-term memory is usually our biggest foe when it comes to making financial decisions. We get impatient when our investment balances don't grow as quickly as we'd like, or our friends seem to be having more financial success than we are. And of course, we get frustrated and mad at this snail pace and decide to do the worst thing, go on a spending bender. Instead of letting the pressure lead you to make an impulsive decision, sit down and discuss your finances with your spouse or someone you trust. This helps to keep your long-term goals in focus.
Define your goals, such as saving for a down payment, starting a retirement fund and taking an annual vacation. Then set up plans to reach those goals. Having that accountability with someone (a spouse, best friend, family member) helps motivate you to stay on track.
Are you expecting a raise this year? Pretend you're not. By keeping your standard of living the same and not increasing your spending with each bump in pay, you can pocket the extra money and use it to reach your goals. The same goes for that year-end bonus or tax refund. If you're making $40,000 and you get a 3% raise, that's an extra $100 per month before taxes are taken out. Even after Uncle Sam takes his share, you'll have plenty left to do some good. For example, it only takes a few extra bucks to start your emergency savings, begin investing or pay extra toward your credit card debt. You could even use the money for something fun. Begin saving for that dream vacation to Europe or that tropical paradise that you have been wanting to visit.
And if you are not getting a raise this year take the bull by the horns and make something positive happen. You could get hundreds of dollars added to your take-home pay each year simply by telling Uncle Sam not to take so many taxes out. Most of us give the government too much upfront -- that's why we get tax refunds in the spring. Take back your money and use it throughout the year instead to help you make ends meet Even if you can’t use all of these tips, try out a few to see what works best for your situation. And then you can build toward a future that is not so frightening.
