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Financial Spring Cleaning

Credit Wise (featured column)
submitted by Jennifer Wallis

Tulips are beginning to poke their heads up through the soil. Fruit trees are performing their best flower show. Birds are chirping and the auburn sunset gets later every day. Spring is in the air. For many, this also means that it’s time for some spring cleaning around the house. Why not expand that “out-with-the-old, in-with-the-new” mentality to your money?

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Get rid of those old bad spending habits and start fresh with new budgeting skills. Before you know it, your financial savvy will be in full bloom just like those Bradford Pear trees outside my window.

The main reason people put off setting up a budget is because they think it’s too hard. It does not have to be a sacrifice if you take simple steps. In my opinion, the only way a budget will work long-term is if it isn’t too much of an inconvenience. Find a way to budget that will fit your lifestyle. Here are some easy ways to get started:

Use a Calendar

Use a calendar to write when money is coming in (pay, retirement, etc.) by date, and write down when bills are due as they come in. Mail payments at least one week before the actual due date to avoid late fees or pay them online. I get paid every 2 weeks and find it easier just to pay all of my bills on payday that are going to be due before I get paid again. That way, I just pay bills every 2 weeks and everything always gets paid early.

Track Your Spending 

Use a tracking sheet to write where you are spending all of your money. Write down all cash spent by the category in which it is spent.  (When using a check, write in your checkbook how money was spent.) Keep your tracking sheet at home, in your car, or in your wallet – keep it where you will use it. It may be easier to use it daily than to try to remember what to write later.

Develop a Spending Plan (Budget)

At the beginning of the month, use the first column to write planned spending. Once a week, list in a column what you really spent using the amounts on the tracking sheet and in the checkbook. At the end of the month, subtract the amounts spent from the amount planned. A difference is normal – seeing it helps make planning decisions. Use a spending plan (budget), to decide and list where to spend money. Plan for expenses that do not occur each month by taking the yearly cost and dividing by twelve months, then list it on your monthly spending plan.

Savings Account Ledger

Use a savings account for periodic expenses to save in your spending plan:

A) Set aside money each month for planned expenses like car tags and clothes. For example, to plan $300.00 per year for car maintenance, divide by twelve: plan to save $25.00 per month.

B) Save money for emergencies. Set an initial goal of one month's income and then build from that point (three to six months recommended).

C) Save money for goals: a new car, a house, a vacation, or college.

D) Save money to make long-term investments for the future.

Just by making a few small steps, you can learn much about your spending habits and where you may be able to cut back. There is no better time to shed those bad money habits and start clean with a new budgeting attitude.

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Copyright © 2004 by Jennifer Delcamp. All rights reserved.

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