Tackle Those Money Goals

You can never be too rich or too thin.

While I don’t think Wallis Simpson is quite right about that, it does speak to two of the most popular resolutions made each new year: To lose weight and save money. Neither is complicated — to lose weight you need a calorie

too rich? too thin?

deficit; to save money, a funding surplus. Then again, neither is easy. Both require dedication, determination, and preparation.

Right thinking

Making successful, long term improvements to your lifestyle and habits can’t come from changing your outward behaviors without also changing the thinking that drives them. Taking time to consider what it is exactly you want to change and how you got to that place helps to clarify your goals as well as keep you focused on your “why” when the going gets tough.

I can tell you from personal experience, with the better health campaign I’ve been on the past few years, that it works.

Doing the same things you’ve always done are going to get you the results you’ve always had so naturally your actions need to change. What are you doing now that is not compatible with where you want to be and why? Is mindless spending (or eating) a result of not having enough time? Are you buying stuff you don’t need and can’t afford to distract yourself from problems? Are you using money or food as a reward? That was a big one for me; I had to intentionally retrain my thoughts to not automatically want to celebrate good things (or cry over the bad) with a sweet treat and find a better substitute. Without first addressing the underlying reason for behaviors that are taking you in the wrong direction, change won’t be long lasting.

When starting on a financial or health improvement plan, use the SMART system. Make your goals Specific, Measurable, Attainable, Realistic and Timely. Put a number to your goal, and give yourself a timeline to achieve it, with smaller milestones to hit along the way. Saying you want to have $1,000 in the bank might be overwhelming, when breaking it down to $25 a week at a time may feel more attainable and keep you going.

Right tools

Having a handle on your spending is essential to making serious changes in your finances, just like cutting calories when losing weight. Budgets and diets both have the negative connotations of being restrictive, joyless and something to endure. Flip that thinking around and use a spending plan instead as a way to deploy your money to do what you want it to do, to spend in the places you have carefully considered, rather than leaking out unintentionally.

Going back to breaking down your goals into smaller pieces, start with looking at your regular bills, things like electric, cable or your insurances. Are there easy ways you can trim those bills, by switching providers, or dropping services you don’t use any more? These are the more painless places to cut, when they don’t impact your lifestyle much. It’s like cutting out that piece of candy you take when walking by the candy bowl just because it’s there. You’re not going to miss it.

The variable expenses are where the real change can happen, such as food, gas, entertainment and the miscellaneous. Those are the tough ones, too, because many of those things add to the perceived quality of our lives. That’s when focusing on your “why” helps, to keep in mind that what you’re cutting out here is still for you, just in a different pocket or for a different time.

While you can see your credit card and bank account spending online or on your statement and eyeball how much is going where, tracking your spending real time will give you the data you need to make good decisions throughout the month. Apps like Mint.com give you a platform to set a goal amount in various spending categories and pull in your transactions while automatically categorizing them. You can see at a glance how much you have left to spend in any given category.

A Quicken report or simple spreadsheet can do the same, although not as automated. Most of us have a general idea of where our money is going, but really seeing it sometimes is surprising, shocking even. That’s not a bad thing, as it wakes us up to the realization that some of our spending may not be going to things we value, and th

en we have the information we need to adjust and spend each dollar purposefully. Entering everything I eat into MyFitnessPal was an eye-opening experience as far as the real “cost” in calories of certain foods and allowed me to choose wisely within my daily budget.

cardio is hardio

I might be able to afford a cupcake in my daily allowance, but is it how I want to spend it, or would I rather save it for dinner? It’s a choice I make with full awareness now, and when I bypass that treat, it’s not out of denial but rather as a positive step toward the ultimate goal. Just like weight loss gets a boost from exercise burning calories, money goals get a boost from smart shopping saving dollars. While strategically cutting expenses helps, so does making your dollars go further. So think of comparison shopping, clipping coupons and using discount codes as your financial cardio.

Right team

Making lifestyle changes doesn’t happen in a vacuum, especially when your finances are joined with someone else’s. Those close to you must be on board as well, or at least not working against you. If you decide to cut out an expense but your partner then picks up the spending, you’re not getting anywhere.

Without communicating your vision and maybe even selling them on it, your kids may squawk and your friends may not understand your new habits; it’s easier to keep going if the resistance around you is minimized. On the other hand, having support and those around you working along with you is invaluable for your progress. Aside from getting those immediately affected on board with you, partnering with friends pursuing similar goals can help with accountability, advice and encouragement.

 

 

 

 

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Part 2A & B of Form ADV: Firm Brochure