GRAND RAPIDS, Mich (WOTV) – From the middle class to millionaires, everyone feels a few dollars short of comfort at times. But more money won’t necessarily solve financial difficulties. Developing strong money management skills can help you use the money you have today to live the life you want. Plus, when your ship does come in — the great job, the winning lottery ticket or the inheritance from rich Uncle Bob — you’ll know how to handle it.
Setting goals provides a mechanism for overriding the impulse to buy things that are not as important. Many times, we don’t associate spending plans with dreaming, but if we do it right, it’s a key to success. We need a reason to not spend on things that really don’t matter and you decide that when you have a goal in mind that’s more important.
Writing down your goals will help prioritize spending when it comes time to map out your plan.
The only way to plug the leak is to know where the leak is. Take some time to try to follow every cent spent: the rent payment, the $3.32 latte, the 50-cent newspaper, the 79-cent pack of gum — everything. Almost everyone can usually account for most of their spending with a cursory overview of their finances. Most people can get to 90 (percent), but the last 10 percent is a killer.
Money can just seem to disappear … lattes, tips, food at work, allowances for the kids. Just write it down and by the end of the month you’ll have most of the 10 percent and know where almost all of your money goes. Continue to take notes on spending after the first month. Keep up with the balance in your checkbook, each time you make a deposit or withdrawal, reconcile or balance your checkbook. It’s important.
There are many ways to help you track your money like mobile account apps, online banking, and automated phone systems. With tools like alerts, you can schedule an alert to see when a deposit, withdrawal, or debit card has been used. Check with your credit union and take advantage of all the tools to help you.
To combat sluggish savings, earmark a certain percentage or dollar amount for a savings account. Savings accounts can be either specialized retirement accounts or regular deposit accounts. Start small to get into the routine of saving regularly. Have your direct deposit split between your checking and savings accounts.
When you’re getting started, it’s more important that you get in the habit of saving rather than that you save a lot. By splitting your direct deposit, it’s a great start. Use windfalls and raises to jump-start savings as well. Got a raise at work? Put that money toward savings. Funnel at least half of that newfound income into savings.