Now that the Halloween parties are over and then decorations are put away, pretty soon it will be Christmas, New Years, and then tax time. Getting a hefty tax return can pay for a nice vacation away, complete home renovations, while owing can start off a new year behind, wiping out any extra in the savings account. While it is important to plan for your return, it is what we do on a day to day basis that sets you up for the entire year, staying ahead or behind.
Stay out of the Red
In business, companies are often a success on whether they are in the black, profitable, or in the red, owing, on a monthly, quarterly, or yearly basis. Same goes for the average person. If you have more money going out in spending than coming in with your income, each month you sink deeper and deeper into debt. The best way to avoid unnecessary spending is to create a monthly budget. With that you can see incomes coming in, expenses/bills, spending habits, and start to watch the progress you can make to have more money coming in than going out.
Paper or Plastic
Credit card abuse is one if the easiest ways to sink into debt that can add up each month. Since it is not actual money and cards have high credit limits, there is virtually no reason to stop spending each month without discipline and a plan. You need to be able to set limits for yourself on how much you can spend each month that you will be able to pay off the full statement balance by the time it is due, otherwise you could be paying upwards of 15% interest. What you cannot pay off will be carried over to the next month, and pretty soon you could have thousands in debt that will never be paid off.
It is hard enough making sure that money coming in is more than coming out, credit cards are under control, and are not carrying debt, but what about savings. You need to contribute to savings so that you will have a cushion for emergencies such as job loss, a broken appliance, or unexpected medical bills. Once you are in the black, so to speak, each month, you will need set automatic deposits to savings, start small and build up from there, so that savings will add up over the course of the year. It is not easy, but you will thank yourself down the road.