Money Power: Managing money is about making a plan
BY JESSICA ANDERSON Money Power
Sunday, December 09, 2012
12/09/12 at 7:07 AM
Lose weight. Go to the gym three times a week. Stick to a budget. New Year's resolutions can end up feeling restrictive. But budgeting doesn't have to handcuff you.
Set goals. If you're having trouble putting a budget into practice, you may lack motivation. Discipline is easier to embrace when it comes with a reward. Your goal might be to save enough money for a Caribbean vacation or a down payment on a new crossover.
If you have a big monetary target - say, to save $30,000 for a down payment on a house - break it into smaller goals so that you can see the light at the end of the tunnel.
Account for all your expenses. You may know what you pay every month for housing, utilities and your car loan, but what about clothes and eating out? Do semiannual expenses such as insurance and gifts throw you into a financial tailspin? You're not alone.
To see the big picture, you'll have to take stock of your spending. If you aren't already using a budgeting tool, tally up all the big expenses that don't come every month and estimate your annual costs. Divide that by 12, and add the amount to your monthly budget. Then review credit and bank statements for several months to see what you're spending.
Build in wiggle room. If you're overspending every month, it may be because you haven't built in a buffer zone for each category.
Make a commitment. Plan a time each week to sit down, track your spending and see how you're doing. And let's face it: You have to make trade-offs to reach your goals. If you spend too much on eating out, cook more gourmet dinners at home. Change your route to work so you don't pass the Starbucks as often, or head to the gym instead of happy hour.
Original Print Headline: Managing money is about making a plan
Jessica Anderson is an associated editor at Kiplinger's Personal Finance magazine. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.