Recently I had the pleasure of presenting to the Getting Ahead, Staying Ahead mentoring group.
In the Getting Ahead, Staying Ahead program the participants have already created a budget and I was asked to present on tips for sticking to it. I think that sticking to a spending plan is something we all struggle with at one point or another so I thought I’d share some of those tips in my column as well.
The first tip I have is to track your spending. Tracking is critical to see if you are staying within your spending plan, helping you make adjustments to your plan, and it also helps you find spending leaks.
It doesn’t matter how you track it. It could be with an app, in a spreadsheet, with a check register, or simply on a piece of paper. You want to track for at least 2 weeks to a month to get a good idea of how much you are really spending and where you are spending it.
Many of us don’t realize how many times we buy that soda or candy bar, or just how many times we ate out this month, until you write it down and see how much it really costs.
Once you have tracked, then it’s time to evaluate how you’re doing, if you need to make changes to your spending, and if you need to adjust your plan so that it is more realistic for you.
Research has also show that it is important to set goals and keep those goals in front of you where you can be reminded of them. Whether that means hanging them on the frig or the bathroom mirror, you want to find a way to remind yourself of what you are working towards.
Goals can also help with spending leaks. Every spending choice has an opportunity cost. If you love shoes and buy a new pair twice a month, what are you giving up?
Let’s say those shoes cost $80 a pair. That is $1,920 dollars over the course of a year. That’s a vacation.
The third tip I’d like to share, is to talk about the money. Many people don’t like to talk about money, but a spending plan is a family affair. You and your significant other need to communicate about what your priorities are and work to be on the same page. Everyone has different values and it’s good for each person to have some of their own pocket money, but when it comes to your major financial goals, you need to be on the same page to accomplish them. Not communicating about your plan is a quick way to get off track and have conflict. Kids are also a big part of a spending plan. When I asked some of the mentors what their spending leaks were, one of the answers I got was, kids!
It’s never too early to start talking with kids about money and it actually benefits your kids if they don’t always get what they want or if they have to find a way to contribute to getting what they want.
My fourth tip is to automate your savings goals. Research has shown that you are more likely to save money if you automate. When you do this, you are paying yourself first. With technology today, it is easier than ever to set up an automatic transfer from checking to savings or if your employer offers direct deposit, have a percentage of your paycheck automatically deposited into savings.
The last tip I’d like to share is to have an emergency fund. There’s nothing like a car breaking down, a medical emergency, or losing a job to completely set you off course At least $500, or 3 to 6 months of expenses is what is recommended for an emergency or “rainy day” fund.
For more tips and resources on money management, contact the UF/IFAS Jefferson County Extension Office at 850-342-0187.