Force of habit means it can be difficult to change your money-management system or even recognize the possibilities for improvement. Whether you track your spending to the last penny or you're a little loose with your dollars, it's smart to give yourself the occasional financial health check. Believe it or not, it's possible to enjoy yourself through the process, too.
First Things First: Make a Budget
If you don't have a budget yet, the first thing you need to do is sit down and make one. If you've already got your income and expenses written down on paper, you should review the information annually and make sure your budget still aligns with reality. Verify that you're saving a healthy amount -- 5 percent minimum, but you should aim for 10 percent. Look at your housing costs. Your mortgage or rent shouldn't take up more than 35 percent of your net income. A maximum of 15 percent should go to transportation costs. If you need help sticking to your budget, meeting savings goals, or cutting variable costs, activities beyond drawing up a basic worksheet can help.
Live on Jars
If you have trouble sticking to your budget, take the cash diet challenge. Stow away your debit cards and credit cards for the month, and instead have cash-filled jars dedicated to your major monthly expenses, other than housing and debt repayment: food, clothing, transportation, entertainment and other. Personal finance author Gail Vaz-Oxlade uses this activity with her clients, who often find that they have cash left over at the end of the month.
Dare to Dream
Sometimes, all it takes to get your budgeting back on track is a little motivation. If you're finding it hard to tighten your belt and pay off your credit card debt, for example, you should find out just how much that burden is costing you. Look up your credit card records for the year and calculate how much you paid in interest. Consider how long it would take to pay your debt off if you only made the minimum payment each month. If saving is your problem, make yourself excited about your goal by doing some research. For example, if you want to buy a house, visit open houses. Research the prices of homes in your area, and discuss hidden real estate costs with an agent. Not only will getting numbers make your goal seem more real, but it'll make your budgeting more accurate.
Make it a Game
Maybe you calculated that you need to cut back if you want to save more, but you're not sure where to begin. Start with your entertainment expenses, but make a game out of it. Challenge your significant other to see who can make an at-home meal for cheaper, instead of going out to an expensive restaurant. Discover which of you can plan the better $10 date, transportation included. If you're stumped for ideas, bicycle rides, shoreline walks and public events are all inexpensive options.
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