As the haze of the hectic holiday season fades, the bills that paid for all the fun and frivolity start arriving. And if you’re like many people, you vow to do better with your finances in the new year.
And while there may not be any fun in it, creating and sticking to a budget can help you avoid overspending— not just during the holidays, but throughout the year. In fact, if you’re not careful you just may set yourself up for financial success in 2018.
Imagine that.
“Financial capability is more than just knowing what you’re supposed to do. It’s knowing how to do it as well,” said Liz Foster, an Accredited Financial Counselor based in Colorado Springs, Colorado.
According to Foster, understanding the how of money matters begins with knowing where you are spending your hard-earned dollars.
“Most people haven’t gone through the process of writing down where every dollar is spent within a given time period,” said Foster.
Doing so can be a real eye-opener and Foster advises all her clients to track their spending as a first step towards true financial capability.
“Take the time to really identify those areas where you’re spending. For 30 straight days, keep all your receipts or faithfully jot down the amount and the reason for the purchase every time you spend any money,” she said.
There’s an App for That
If the thought of accounting for every single cent just doesn’t excite you, Foster suggests you make easy work of it and simply automate the deed.
“You know what they say: ‘there’s an app for that.’ Try easy to use tools like Every Dollar and Mint. Most online banks also have easy to use online budgeting tools today,” said Foster.
Other money tracking tools include ClarityMoney, YNAB, and HelloWallet. Find that one that feels right to you and start tracking.
Put Your Paycheck to Work
“Look at those numbers at the end of the 30-day period and try to get a good sense for where you are overspending,” said Foster adding that this is way to gain control over your finances.
Foster also suggests you put aside denial and simply work with what you find.
“Give those areas where you are spending a name and adjust your numbers going forward. Make every dollar you earn have a job do to and zero out your income in the process,” said Foster.
“Give ‘savings’ a job, too. Make a portion of your paycheck work towards it,” she said.
“You can achieve financial capability by gaining control of your finances, regardless of whether you get paid once a month, bi-monthly or even sporadically,” said Foster.
Pay Your Bills First
Foster strongly suggests that whenever you get paid, you take care of business first.
“Pay your bills first. Anything you have left over after that is called discretionary and you can spend that however you’d like,” said Foster.
Foster suggests you frame the amount of discretionary funds available to you after paying your bills into an “available per day or week amount” until your next paycheck arrives.
To do that, simply divide the amount of money left over by the number of days (or weeks) left until your next paycheck.
“Getting a good grip on your finances can admittedly take some trial and error, but don’t get discouraged and don’t give up,” she said.
Financial Resources Available to You
“Online, there are a number of great resources you can access to help you, free of charge such as Military OneSource and SaveandInvest.org,” said Foster.
“You can also visit with certified financial planners on your closest installation at the military family support centers, too,” said Foster.
Military and military service branch relief societies also offer you financial assistance in emergency situations.
