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Monday, January 28, 2013

Monday Money Advice

I heard something the other day that made me stop and think. "We should learn to live below our means." What? Below? OK, after a minute of panic I realized there is merit to this idea. Word from my accountant and realtor and mortgage guy are all saying the economy is on a much needed upswing, and people may be getting raises this year. I hope your employer is one of those who will start considering making up for the last few years and giving you a bump up. In either case, raise or not, doesn't it make sense to still cut corners and save money where we can? If you agree keep reading, if not, go get a latte and ignore the pending fiscal cliff that will be facing us again soon.

Still with me? OK, great!

Here's a few things that you may want to consider to live below (or at) your means. Pick and choose, this isn't a fail safe formula for everyone, but hopefully it will give you some help to becoming independent and keeping a little extra in your bank accounts.

1. Set a budget system that works for you. I know many people who have jumped on a money saving diet, following the latest budget guru just sure that THIS method will be the one to save their financial lives. Bottom line--if you can't pay for it right now, you can't afford it right now. Save up for it and if it's a necessity it will happen. We have need a new mattress for years. We have credit and could have plunked down our plastic and had said mattress years ago. However, we saved and after two years we have a paid in full King sized bit of heaven. It was worth the wait.

My husband likes to use Quicken to track our spending. I hate it! I hate that I am doubling my work--once in the checkbook and once on the computer. But, it works for him and has kept us in food, clothes and shelter for many years. I have friends who use the "envelope" system, dividing up their cash into said allotments for their needs. I hate having cash, enveloped or not, because it can get lost and I have no record. But, if it works for you, use it! I use a sticky pad, pen, check book register and receipts. I know-too high tech. I plan out my spending limits and deduct from my sticky note when I balance my checkbook weekly. I can see where my money has gone, what's left to spend where and thought it doesn't have a fancy bar graph or pie chart, I can see where I spend too much. It gives me a focus, and if I lose the sticky, I can easily replicate it by checking my register. It works for me and that is all that matters.

2. Use the want ads. Finding something new that someone else doesn't need can score you a new piece of clothing or furniture for a fraction of the cost. There's no tax to pay, and generally people are willing to negotiate the price a bit.

3. Put money in savings every check. Start small and work your way up. I don't know there's a magic percentage--some say 10% of your monthly pay--but something is better than nothing. See if you can live on 10% less than you get paid. My mortgage guy's advice to me was to save before I invest. Savings are liquid assets and if I need them I have automatic access. I agree, this makes sense.

It's the "new reality" for us to be prepared. Little changes this year may add up to a big pay off. Happy Savings!

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