The start of the New Year is always a time of reinvigoration, change, prioritization, and reflection. For many, our focus is on health changes and big goals. For some, that health change may be just as much for their pocketbook as the number on the scale. And while as a state we will continue to see many changes as a result of recent devastation, it is important to focus on the small changes we can make as well as the big ones. If having a larger savings account, or tighter budget is your focus, here are a few things that can help put you on the right track.
Pay yourself first: While many of us are working down credit card bills racked up over the holidays, it can be just as important to be sure to save cash. A good rule of thumb is to split what you have after paying your survival minimums between a savings account and paying off debt with a goal of keeping a “float balance” of three times your monthly survival number.
Know your monthly survival number: This is the minimum it takes to run your life. Your housing payment + groceries + utilities + minimum car and credit card payments. This is not your vacation fund or going-out budget. Having this number defined allows you to better focus on what you can do with any additional monies, like save for a house, go out on the town, or get out of debt faster.
Check the apps: Your phone is a magic device that also can hide recurring spending. By going to your Settings and then the list of apps that are on your phone, you can see which ones may come with a recurring price tag that could be brought down or even cut out. Many will let you still use the app until the membership time is set to expire, and then offer you a discount to stay connected.
Weekly $10 challenge: Every week, challenge yourself to cut spending by $10 from the previous week. Does that mean getting only one drink at dinner versus two? Or perhaps planning ahead to have leftovers to take for lunch one day versus eating out? Take that $10 and apply to debt, or a savings jar that you can watch grow. Tip: Label the savings jar with a picture of a dream vacation to entice you to fill it up sooner.
Act like it’s already yours: Getting ready for a big purchase that comes with a recurring monthly payment? Pretend like you have that payment now — what must adjust? Does it feel right, or do we need to refocus? Maybe you are asking for a raise or promotion. What responsibilities would come with that raise, and can you handle them? Do these changes inspire you?
Play the Credit Card Challenge: Remember, credit is like high school — you want a lot of folks saying nice things about you. Spread debt balances over several cards to keep balance-to-limit ratios on the lower side. Make a list of cards from lowest to highest balance and focus on paying the lowest balance off first, then repeat.
Celebrate the wins: All of these challenges must be celebrated when you achieve them. Did you make progress? YAY, GO YOU! Give yourself a pat on the back, a big grin in the mirror, and maybe get a little something to reward yourself. By making it fun, you will achieve more and faster.
Whether you are saving to buy a home, working to afford the one you are in, or simply struggling as prices continually increase in any marketplace, taking a healthy approach to managing your finances is key. And while, yes, our state is in for quite a recovery coming out of recent events, by working on putting ourselves in a better place, we can then give more to others. Give more, give often, and be courageous — money compounds over time, and your efforts will too.
Austin Lampson is a licensed mortgage professional and branch manager of Movement Mortgage. She has spent the last quarter-century helping her clients balance math and emotion to achieve their financial goals. Reach Austin at (805) 869-7100 or austin@austinlampson.com, or visit austinlampson.com.
