For some reason people have been coming to me with a lot of money woes lately. Not that I mind, I do financial planning of sorts for a living. I help people adjust their spending. In today’s times of high gas prices and rising costs of food, schooling, and just about everything, almost everyone needs some adjustment.
Before I continue, don’t think I’m another rich person telling poor people what they are doing wrong. I’ve been homeless for a period of my life, living from door to door and in my car. I worked my little behind off to reach the status of a home owner and to this day if I screw up it’s all on me. I take a lot of pride in the fact that no one else has paid for my life aside from me, but it is certainly a stressful situation at times when the bills get tight and phone calls have to be made.
Many people haven’t had the luck (and I do admit it’s a lot of luck) that I have had in regards to my choices. A lot of my friends have found themselves living back at home or without the ability to move out of their parent’s home for various reasons. Those of us who are still out on our own are suddenly swamped with gas, food, heat, air and all the other things that come along with living on one’s own.
Either way, saving and planning should be the same.
1) Give yourself a goal that is far enough in the future to be reasonable. If you say silly things like “I want to travel the world this summer” and you just had to close your checking account you’re not going to get your goal. Best to set things far in the future, let’s say your goal is to move into your own place in the next five years.
2) Do EVERYTHING financially with this goal in mind.
Fine to say, but how do you do that? First you need to sit yourself down, be it in your room or kitchen and have all of your bills for the month in front of you. There are two major things you’re doing in that time.
1) Remember the due dates. If you’re not the sort who remembers dates well, get a pocket calendar. It is your responsibility to remember these dates and really, excuses don’t cut it.
2) Remember the amounts. You don’t have to recall the cents. Just round up. But angry bill lady, you may say, my bills fluctuate! Round up or take the largest bill. For example in the summer you may get by on 50 a month for your gas, in the winter that bill may be over 100. You will want to budget for 100 a month. Always budget for the largest your bill can become.
Next pull out your paycheck. Take the LOWEST your pay will be if you don’t get a set wage. Remember when you get paid. Make your pay dates line up with your bills. The way I usually suggest people do this is columns. However you do it you need to know how well your current paycheck meets your basic needs and the SCHEDULE of those needs.
This may be harsh to some of you, but you need to remember your own information. No one else is going to balance your checkbook. If you’re unwilling to do it, then stop whining and mooch off family or find a significant other who doesn’t mind the fact that you’re a lazy ponce.
If you don’t have overage, then you’re in trouble. You need to either raise your income or lower your bills. Both are easier said than done. You can ask for more hours at work or try to pick up a part time job. You can also deal with creditors on a personal level.
Call your creditors. Honestly, they have people that work for them who can be very understanding. Say “I got sick and my check’s really low this week. Can I please pay half of it next week and then the rest by the end of the month?” You’d be amazed at how understanding people can be. Remember what bills you put off and when you did it, also remember who you talked to.
You may have to get rid of some things for the time being to make ends meet. This is not fun, but if you can’t pay your rent you need to cut out cable. Try not running your air or heat until you positively need to. You don’t need all the additions on your cell phone and the library has the internet for free. All else fails, live with people. Roommates make things cheaper. Remember you set a goal and you need to create overage to reach it.
Next we are going to assume that there is overage after your basic expenses. Now you need to add your “life” expenses of food, transportation and entertainment. Here is where you can actually afford to cut back and show a little leeway. Remember that going to the grocery store and packing your lunch is cheaper than going out for lunch. Going out for dinner or to the club every weekend is fun, but if you really want to have your goal, you need to cut that back. You’ll get tired of rice and ramen, but in the end, you’ll have to do something.
If you don’t want to cut things, please see my previous statement about stopping whining.
Finally, open a savings account and name it whatever your goal is (like “Vacation Fund”). Many banks require a minimum amount in these accounts. I know that my bank requires 300 in the account at all times. Save your money till you have enough to open that savings account. If you are the sort who can trust yourself to not touch it link it to your checking for overdraft protection. If you cannot trust yourself do not link it to your checking. Keep it separate, keep it away from view and put money into it at the end of every month.
A savings account is the hardest step. Once you get a savings account you’ve done a lot of good. You’ve given yourself a financial cushion and peace of mind. You’ve also set yourself up to continue to save money. Maybe some months you won’t put anything in it, that’s fine. The point is to do SOMETHING and even if you’re doing it slowly, it’s better than nothing at all. At least you will reach your goal sometime this way instead of being at square one constantly.