Mitzi Parker: Keep your 2015 money resolutions
The new year is an opportunity for do-overs, fresh starts and new beginnings. How many of you made resolutions involving money? Did you promise to save more, spend less or pay off your debts? Where do you start? Examine your goal and start with small changes. Small changes to your daily routines can make a huge difference over the course of a year. If you want to fail at keeping resolutions, focus on what you have to give up. Thinking about what you are sacrificing all the time practically guarantees an epic failure. Think positive! To be successful, focus on the prize — the benefit you get from having money for important goals such as paying for a college education, getting out of debt, buying a first home, and saving for retirement. Here are a few tips to help you manage your money better in the coming year.
Know where your money goes. Find out how much money comes in and exactly how you spend it. Carry a notepad with you for a month or two. Record every purchase. At the end of the month, separate your spending into no more than a dozen categories such as food, housing and transportation. Target eyebrow-raising surprises for spending cuts. If you have never tracked your spending, you will probably find out you spend a lot more than you thought for something you do every day. If it bothers you that you spend so much for whatever it may be, do something about it.
Set realistic and specific goals. A specific goal includes the cost of the goal and the date you plan to reach it, such as planning to save $600 by next December for holiday gifts. The goal is realistic if you can afford to set aside $50 each month.
Develop a plan for spending to meet goals. Besides goals, your spending plan needs to include fixed, variable, and occasional expenses. Fixed expenses are the same every month. Variable expenses go up or down each month. Occasional expenses are due less often than every month. Some occasional expenses, like birthdays and annual insurance premiums, you know about. Others, like medical bills, arise unexpectedly.
Focus on one expense at a time. When making changes, it is easy to go too far, too fast. Commit to making a few changes at a time to reduce your spending for a particular expense. Stick with the changes until they become second nature. If you miss a day, a few days, or even a week, do not give up.
Pay yourself first. Saving whatever is left usually means not saving at all. Instead, put the money you need to save for goals and occasional expenses in your savings account before you spend a penny for anything else. Better yet, arrange for an automatic deposit or payroll deduction into your savings account. When you get a raise at work, sign up for half the raise amount or more to go into a savings account or a company savings plan.
Eliminate debt. Pay attention to how much you pay in monthly finance charges on credit cards and other debt. Instead of paying interest each month on your debt, you could be earning it on your savings. Being on the lending side of that transaction is a much better deal than borrowing. The money going to debt payments each month could be going to your savings.
These simple suggestions can help you do better with the money you have. The sooner you start, the more you stand to gain. Changing overnight is a tall order; habits are hard to break. By mid-January many of us have already abandoned our New Year Resolutions. Have you already lost your focus? Don’t be too hard on yourself and don’t give up. People who stick with their goals long enough to be successful know that failing is part of the process. Persistence–trying again after every failure–is the key to success.
Mitzi Parker is Sumter County Extension agent/Family and Consumer Science, University of Georgia Cooperative Extension Service. Contact her at 229-924-4476.