Empty wallets? Now that the United States budget crisis and raising the debt ceiling is done, we face another volatile stock market. Our collective empty wallets are refilled or are they? Who empties your wallet? Do you keep track of where your money goes? What do you do when you run out of money?
How you handle your cash, credit cards and the rest of your finances determines your financial well being? Do you know how much money you have in your wallet? Do you know how much you are spending? Are you spending less than you earn? Do you have savings? How do you keep track of what you are spending? If your answers are I don’t know, you probably out of control! Here are 5 simple things to take control of your wallet.
Start a budget – I know you don’t know how to do it, it is too hard, you don’t like being controlled or really don’t want to know how bad your finances are! Stop making excuses. Keep it simple, start with your monthly income. If you are paid weekly, multiply it by 52 and divide by 12. List all you expenses such as mortgage or rent, utilities, property taxes, insurance, food, entertainment etc. If you missed anything, you can catch it when your pay bills.
Once you have your budget set up, you can record your expenses during the month. If you are spending more than earn, you will need to lower your expenses. A budget helps you track your expenses and helps you control your spending. Setting limits help you know how much you can spend. The budget shows you on paper if you are overspending or reaching your goal. Budgets are a road map to your financial goals.
Increase your income – How can you increase your income? Merit increases, promotions, new job, part time job, side hustle or selling something on eBay. Additionally ideas earning interest, capital gains, or dividends. Start a service business such as consulting, catering, lawn service, yard sales, tutoring, or child care. Be creative there are many things you can do to earn extra money.
Problem-Solving Skills – We are not talking math skills here! You make decisions every day that can affect your wallet. You know what I am talking about, it is your morning coffee at Starbucks, going out for lunch, and adding to your debt. When you need to find savings in your budget, you make choices. Cutting expenses is not just reducing what you spend, it is spending smarter! The kinds of choices you make help you achieve your goals. How are your problem-solving skills?
Determination and Tenacity – When faced with goals of improving your financial well being, it takes a lot of skills. Sticking with your goals is important! This is tough, changing habits, making adjustments or beginning a new routine takes considerable effort. It is tenacity and determination that gets you there. Stubbornly sticking with bad habits does not work! Making small changes will help you increase what is in your wallet. Are you ready to change?
Acquisition of Financial Skills – Many people express that they are not comfortable with numbers! You have no choice, if you do not have the financial skills, you need to get them. It is as simple as spend less than you earn, save for the future and stay out of debt. There are books, magazines and personal financial blogs (like this one) add to your financial skills. Financial literacy influences your decisions, actions and results. Improving your financial skills help all of us. Understanding credit cards, mortgages, banking, and money is important because you are using these services every day.
Final Thoughts – Taking control of your wallet is one of the most important tasks you have! What are you waiting for? Start small by reigning in your spending and make small changes. A budget is a great way of finding out exactly where you spend your money. Looking at all your options includes finding additional income. It helps to pay down debt or add to savings. Making changes requires are difficult, it takes a lot of effort to make changes. It takes determination and tenacity. Learning the financial skills helps you make better decisions and choices. What are you going to do? Empty wallets can change!
Photo by: danielbroche
I think that setting small, realistic goals is key to achieving the things you outline here. Many people try to tackle financial issues like they do new years resolutions, with one big Wow-Won’t-This-Be-Great goal. The problem is that it’s a long way to get to that goal and when it doesn’t happen immediately, people give up on the whole thing. If your goal is to go from saving nothing to saving $500 a month, that’s great, but set your first goal at $50, then once you hit that for a couple months, move to $100 and so on. Starting off with energy is easy. It’s keeping that going that’s the tough part, and I truly believe that setting smaller goals helps keep that momentum going, which can lead to true success.
Small changes are a great start to make big changes in your life. For example, if you are inactive, you don’t try and run 5 miles. You start by walking around the block.
Great post. It’s hard to make a major change like how you handle your money. You have to do it slowly. If you’ve never had a budget then start by just tracking your spending for month. Then get your bills organized. Then budget one category, like groceries. And so on until you have a full blown budget. People often try to take on too much at once and then can’t keep up.
Small changes, so you get used to the changes work well. For example, making my savings automatic made my goals so much easier to achieve. Something as simple as setting up a payroll deduction accomplished so much!
I have met quite a few people out there that have become unemployed. The odd thing is though, many of them continue to go out to eat and can’t quite seem to adjust to a the new lifestyle they probably need to adopt. (Not everyone is this way, just some people I know.)
In essence, people need to learn that when their circumstances change, so should their spending habits. (That is, when their circumstances take a turn for the worse. If they improve, they shouldn’t necessarily increase their spending.)
Perhaps they are still in shock! For some the denial actually works for them, but I don’t get it. Many people and companies fail to adapt, an excellent example is Borders. They never really committed to electronic books in a big way.
The budget is the key. I always try to determine where my money is going by writing it down and tracking it as well. I have found that this keeps me from ever running into shortfalls. I even keep some emergency money in an extra bank account to help out.
Your budget is your road map to your financial goals. How you manage that budget will mean success or failure.
Spending is a choice. I met someone who adamantly said she couldn’t save even $10 towards retirement…all while she held a $2.00 Sonic drink in her hand. Even after referencing the drink, she casually brushed it off and went back to the same story…”I don’t have enough to save”
Amazing! A few small changes would yield even more than ten dollars. I think part of it is they think retirement is so far away that they have time, but we know that is wrong.
Definitely focus on the financial education. No one else will look after your money – we are our own stewards in this journey to financial freedom.
With what’s been going on this past week, it’s made me take a hard look at stepping up and learning how to use options to hedge against this movement. Crazy names: Iron condor, fig leaves, christmas tree??
If you do not take care of yourself, no one else will! Successful people understand this more than anyone.
Financial education is extremely important. There are a lot of people who get involved in ridiculous get-rich-quick schemes, who take on more risk than they were aware they were accepting, or who pay into high-expense/high-fee accounts because of a lack of financial knowledge.
Knowledge may be part of the problem, but they keep doing the same things even after they realize the consequences. .
Knowledge may be part of the problem, but they keep doing the same things even after they realize the consequences. .
Great post. Financial knowledge is critical. Even if you are relatively wealthy, and hire a financial planner to manage your money. The only way you can be certain that they are acting in your best interests is to learn about what they are doing, or proposing to do with your money.
There is a long list of sports and entertainment people who would agree with you! You have to know enough to ask the right questions and evaluate the answers.
For me out of this list determination has been the biggest. You have to find that inner strength to motivate you and make you stick with your goal. Without that drive you can easily get distracted. Until I found that in myself, I wasn’t making great financial decisions.
I agree determination is important! That and tenacity will get you through an obstacle or hurdle.
If only our governments would follow your advice!
I am using this moment to announce that I am running for …..! Our elected officials need a course in problem solving techniques. It is sort of what a consultant has to do, evaluate a situation and come up with a recommendation.
Motivating and right to the point. Excellent article for all, reminder for those who are financially savvy and a great guide for those trying to grow their money smarts.
Thanks, money smarts is a good term to describe the desired outcome!
Of these, increasing income has made all the difference in the world. I’ve come to the conclusion that in real terms, I probably won’t see much in the way of salary increases – ever. Unless I change employers every 3 years chasing increases. But when factoring in ever-increasing healthcare contributions, low annual increases, and inflation, this is the reality Americans need to face up to. So, it’s blogging, small biz and real estate for us that will make the difference.
Welcome to the new economy! Looking for ways to increase your income outside of work may be the part of the new economy.
Increasing income is the way I am trying to go too, especially with Darwin’s point.
Increasing income outside your career is certainly an option. Set a goal and create your plan. Go for it!
I find the Mint or Pageonce app great for keeping track of my finances. Just setup your account and it updates automatically. Really handy for checking your spending when you are away from home.
Whatever works for you is great!