What would your future-you have to say to you?
The no-pants guide to spending, saving, and thriving in the real world.
What would your future-you have to say to you?
If you are looking to get out of debt, or you are currently debt-free and want to stay that way, then it is important that you get a grip of your financial situation and live within your means.
A good way to do this is to create a budget as this gives you a clear indication of how much money is coming in, how much is going out and also highlights any areas where you may need to make cut backs should you be falling short each month.
Once you have sorted out the figures and made necessary amendments, for example paying bills by direct debit in order to make savings or cutting existing debts by carrying out a balance transfer to a lower rate credit card, it is time to start focussing on the lifestyle changes.
As you will find, it is one thing to create a budget and quite another to stick to it, but by adhering to the following steps and exercising a certain amount of will power, you should be able to ensure that you live within your means and resist the urge to reach for that credit card.
Keep focussed
Before you start to look at how you can stick to your budget you need to clarify why you need to stick to your budget!
A budget can initially seem like something that has been devised with the sole intention of stopping you having fun and buying or doing the things that you want. So it is important to remember that, though some cutbacks may be necessary in the short term, a budget is a long-term strategy that will allow you to take control of your finances and, all being well, live a happy life that is free from the worry of excessive debt.
Change your habits
Unfortunately, a successful budget can require a change in lifestyle and this can be one of the most difficult things to adhere to.
For example, if you have previously enjoyed eating out regularly then you may have to make cut backs in this area to ensure that you are living within your means. But, instead of seeing this as a negative, try to focus on the positives and remember the reasons why you are budgeting.
And a change in habits doesn’t necessarily mean that you have to cut back on your enjoyment of life and it may actually open your eyes to other pursuits you may not have previously considered.
For example, instead of eating out try preparing a meal at home and turn your dining room into a restaurant. This means that you can still have the fine dining experience but at a fraction of the price and without the worry of making a reservation!
Shop smarter
Lists figure heavily when creating a personal budget and list-making is a habit that you should get used to when trying to stick to your budget.
When budgeting it is vitally important to avoid impulse buying and a great way to do this is to always make a list of things you need before you go shopping.
This means that you will have a clear idea of what you need and you will be less inclined to make random purchases that may just turn out to be an unnecessary drain on your finances. It’s also worth mentioning at this point that you should always differentiate and prioritise the things you need over the things you simply want.
If you are unsure how to make the distinction then put off making the purchase for a couple of days and then reconsider if you actually need it. This cooling off period will often convince you that you can do without it and save you money.
In addition, savings can be made on your shopping by simply swapping big name brands for supermarket own varieties, using discount coupons and looking for any special offers.
Overall, it is important to be fully focussed and committed to your budget plan and to be aware that a change in finances may require a change in lifestyle. But a few short term changes may well add up to better finances in the long term.
Article written by Les Roberts, budget reporter at Moneysupermarket.com.
This post is part of the Yakezie Blog swap. I have swapped this week with Eric at Narrow Bridge Finance. This is a post from Eric discussing the theme: What Motivates You to be Financially Responsible? Please take a moment to read my post, Monsters, at Eric’s site.
Unlike my blogger buddy Jason here at LiveRealNow, I have no family. Quite the opposite in fact, I am loving the single guy life. I don’t have much debt. I love going to the bars and partying on the weekends. I have a good job. I have relatively low expenses. Things are good.
So what is my motivation to be financially responsible? It is two-fold. First, I want to be able to keep doing whatever I want whenever I want without worrying about money. Second, I do want to settle down someday in the not too distant future and make sure I have a good foundation to start the next chapter of my life.
I Want to Do Whatever I Want Whenever I Want
Is that selfish? Probably. But who cares? I don’t have kids, I don’t have a wife. I don’t even have a girlfriend at the moment. I do make an effort to donate to local organizations I believe in and I am happy to have friends over for a pre-game and buy a round of drinks, but that is as far as my obligation to others goes.
Doing whatever I want is not always cheap. I like going to concerts. I enjoy nightclubs. I love traveling and exploring new places. $80 tickets, a $15 cover plus drinks, and a $500 trip are fairly common occurrences in my life.
As you know, money doesn’t grow on trees. I have to work hard to pay for the things I want and the experiences I have. I am totally okay with that. But I have to plan now to be able to do what I want later.
I live in a modest and inexpensive apartment. I try to keep my food budget low. I bought a small car that would be reliable, low maintenance, and fuel efficient.
By cutting out wasteful spending and thinking before I spend, I am able to do pretty much whatever I want. If you have the same goal, dive into the depths of your budget. Dig in deep and see where you are spending money. Not to be cliché, but the ‘latte factor’ is a big deal. Those stops at Starbucks, afternoon snacks, energy drinks, cable bills, and other cash drains might not be worth it. If you don’t really, really enjoy it and get pleasure from it, why would you spend money on it?
My Future – Family, Travel, and Early Retirement
I am 26. I am at that point where I am going on a lot of dates. I am meeting a lot of great girls. One of these days, probably when I least expect it, I will fall madly in love and get married. You know the story.
My short term dream is a life of travel and urban living. My long term dream is to get married to a hot Jewish girl (I am Jewish, so it makes sense to “keep it in the tribe”) and have two or three kids. Once kids are in the picture, we move out from the urban fun areas and settle down in the burbs.
But just because I will give up the party life does not mean I have to give up my passions. I want to show my kids the world, give them amazing life experiences, and help them grow to hopefully be even more awesome than me, which is a hard bar to beat.
To do all of that and reach financial freedom, I have to set my goals and work to achieve them. (In case you were wondering, Jason recently wrote a great post on financial goal setting. If you have not read it yet, you really should.)
To get there, I am already working on saving and investing. I am contributing over 10% of my gross income at work to my retirement plans. I am working hard to pay down my student loans and save up a down payment fund. I am planning ahead and saving for my future goals.
How to Reach Your Goals
You probably have financial and life goals too. What are you doing to get there?
We can always tell people about our dreams. However, unlike when you are two years old and dream of being an astronaut police officer that lives in a toy store with an ice cream machine and a McDonald’s in it, your dreams today can be a reality.
With few exceptions, every person can reach their goals. Do you want to retire at 40? Take steps to save and create residual income streams. Do you want to travel in space? Save up to buy a ticket on Virgin Galactic. Do you not have enough money? Diversify your income streams and make more. Do you feel chained down by your traditional desk job that you hate? Start a business and transition to self employment.
Yes, it is easier said than done. But you will never reach your goals unless you take solid steps to get there. Don’t just dream it, live it.
Please take a moment to head over to Eric’s site, Narrow Bridge Finance. While you’re there, be sure to subscribe. You don’t want to miss his posts.
[Editor: This is a guest post from my good friend Terra. I’ve know her for–jeez, really–20 years. If you’re looking for a staff writer, hit her up. Seriously. She’s good people.]
Who doesn’t want a brighter future for their child? Book store shelves overflow with parenting advice tomes and how-to guides to make “uber-kids”. Eager parents lap up promises to raise their children’s I.Q., increase their chances to get into college, and improve their social skills.
From books to apps to specialized software, there is a dizzying number of products available to help your child grow into the genius you know he or she is.
But what if I told you that the secrets to increasing your child’s likelihood to succeed in life were absolutely free. Simple things you have complete control over. No batteries or special upgrades required. No matter your income, education level, or what country you live in, these deceptively simple tips offer powerful results.
Food connects people. From the dawn of time, our species has gathered around the fire, to break bread and share our stories.
In modern times, our schedule can be crazy (between work, social activities, and, you know, life) so having dinner on the table at 6 o’clock every night is not always possible. However, studies consistently show that having a family meal at least 3 times a week has huge benefits for children (from teenagers being less likely to abuse drugs and alcohol, to increased academic success, to reduced risk of developing eating disorders or becoming obese, the implications are impressive). And it doesn’t have to be dinner, any meal will work. Consistency is the key.
Far from being boring, children find the predictable routine of family meals reassuring, promoting warm, fuzzy feelings of closeness and comfort (though teenagers will never admit it). Whether it’s take-out or made from scratch goodness, nothing says “I care about you” like sharing a meal.
Quality matters here, so remove distractions during meal time (turn off the TV, ban phones) and focus on each other. Take this time to reconnect and talk about your day and ask the kids about theirs. Make this time sacred. It matters that much.
“We need 4 hugs a day for survival. We need 8 hugs a day for maintenance. We need 12 hugs a day for growth.” – Virginia Satir, psychotherapist
Receiving a loving hug feels wonderful. But beyond feeling “nice”, hugs literally have the power to heal us and improve our lives.
Hugs have superpowers. A hug has the power to release a “happiness hormone cocktail” of oxytocin (natural antidepressant, promotes feelings of devotion, trust and bonding), dopamine (intense pleasure), and serotonin (elevates mood, negates pain and sadness) in both the giver and receiver. Bonus, hugs are naturally gluten-free, organic, and have no unpleasant side effects.
To get the most benefits, prolonged hugging is recommended, around 20 seconds. A full-body hug stimulates your nervous system while decreasing feelings of loneliness, combating fear, increasing self-esteem, defusing tension, and showing appreciation. However, this hug fest only works its magic if you’re hugging someone you trust. Since children love to be held and cuddled, this is ideal for family bonding. Not so much with that new client you just landed (awkward…).
How does hugging effect children specifically? Children who aren’t hugged have delays in walking, talking, and reading. Hugging boosts self-esteem; from the time we’re born our family’s touch shows us that we’re loved and special. All of those cuddles we give to our children are imprinted on them at a cellular level and will still be imbedded in their nervous system as adults. Hugs today equal the ability to self-love as adults. That’s an awesome gift.
We all know how important reading aloud to children is, from infants to teenagers. Reading is one of the most important factors affecting the development of a child’s brain. But reading skills are not hardwired into us; we don’t pop out of the womb quoting “Pride and Prejudice”. Reading skills need to be taught and encouraged.
Parents are a child’s first, and most important, teachers. While children can learn from flashcards and workbooks, nothing is more powerful than seeing your passion for reading. Whether you like it or not, your children are learning from your every move. What you find important, they will find important. No pressure! Teaching reading to your child requires attention, focus, and motivation. It also requires access to books, lots and lots of books.
Libraries are a great resource for developing a love of reading in your child. Most have a thoughtfully arranged children’s area offering story-time and other enrichment opportunities. However, nothing beats having a book to call your own, to hold and cherish, until the edges are worn with love.
Having a well-stocked home library, it turns out, matters. A lot. This study found that having a 500-book library was equivalent to having university-educated parents in terms of increasing the level of education their children will attain. That’s pretty powerful. It doesn’t matter if your family is rich or poor, from North America or Asia, if your parents are illiterate or college-educated, what matters is that you have books in your home.
Don’t’ have the space for 500 books? No worries. Having as few as 20 books in the home still has a significant impact on propelling a child to a higher level of education, and the more books you add, the greater the benefit.
Having a variety of books available makes a difference; especially important are reference books, with history and science texts having the greatest benefit.
No money for books? No Excuse! Dolly Parton’s Imagination Library is a great resource for free, high-quality children’s books. When you sign up, your child is mailed a new book each month until the age of five, addressed to them (a very special thing indeed).
I hope these tips empower you to take action. Small changes can have a big impact on your child’s future. Just remember, it’s not the money you make or the tutor you’ve hired or the new app you’ve installed that will catapult your baby Einstein ahead in life. It’s the quiet moments with you at home, eating, hugging, and reading that will carry them through whatever life brings their way.
Are these things you would like to focus on in your family? Do you have simple parenting tips that have made a difference in your child’s life?
CNN Money has an article up on 5 things to do this year. After posting a similar article a couple of weeks ago, I thought it’d be interesting to post about someone else’s perspective.
If you are paying fees for a checking account, go somewhere else. There are so many alternatives available that you shouldn’t be throwing money away. Ally Bank has a great no-fee checking account, as does INGDirect, though ING won’t let you write paper checks against the account. The same principle applies to credit cards. If you have a card with an annual fee and you aren’t getting some monster services or rewards to go with it, run away.
I don’t necessarily agree with this one. If you are in debt, it’s better to use the raise to pay off that garbage, first. When I got my last raise, I immediately boosted the automatic payment for my car to use every new penny. I’ve never had the money available, so I haven’t missed it. Whatever you do, fight lifestyle inflation. Just because you have some more money doesn’t mean you need to spend it. At my last job, I got a substantial raise, so I bought a new car, only to get laid off a few months later.
Wealth doesn’t matter if you squander your health. Go get a physical. Every disease is easier to treat if you catch it earlier as opposed to later. Don’t make the mistake of running your body into the ground. You will regret it later. Effective this year, most health plans will cover a physical with no copay, co-insurance, or deductible allowed.
B***-****. If you’ve still got debt, don’t concentrate on using more of it. Get that crap paid off. If you’re out of debt, look into getting a rewards card that aligns with your goals. If you like to travel, get a card that gives you frequent flier miles. Otherwise, I’d go with a cash-back rewards card.
37% of Americans don’t take all of the vacation to which they are entitled. That’s insane! We work harder and better when we have time to recuperate and relax. Unfortunately, I usually fall into that unfortunate 37%. My vacation resets on February 1st, and this will be the first year in a lot of years that I haven’t had to roll it over or even lose some.
What is your financial plan for the new year?
I have recently reworked our budget, including a new spreadsheet, sorted by categories. It’s a Google Doc template available here. I will dive into each section in detail in coming weeks.
My wife and I had a long conversation about what has worked and what has failed miserably regarding our debt and repayment plan. The results of that conversation will be the subject of a few posts over the next couple of weeks.
Our destination hasn’t changed. Our map hasn’t changed. We are making some changes to the route we take, to allow better for our strengths and weaknesses, both as a couple and as individuals.