I love what I do for a living, but there are definitely some drawbacks. My friends and family will come to me with financial questions but will run from me like I have the plague if they are not following my advice. In fact, a family’s or friend’s communication with me after I give advice is my best indication if they are actually following my guidance. I find the more voice mails I leave, the more likely they are not following my guidance. Such was the case with one of my young cousins.
Samantha is a recent college graduate in her early twenties that recently landed her first job. Immediately, the “I wanna have” disease took over and she quickly found herself barely able to make it from paycheck to paycheck. We sat down and worked on a spending plan based on her lifestyle. As a Starbucks fanatic, I am the last person to deny someone a pumpkin spice latte, but I encourage people to create a budget so you are not “latteing” yourself out of paying off debt, building an emergency fund or saving for retirement. She took my advice…or so I thought.
After not hearing from her for months, which is unusual, I finally got her on the phone and she admitted that she had been avoiding me because she was not following the budget. Once I told her that it was okay, that a failed budget only means re-strategizing, we looked at ways to help her stick to her spending plan. If you are having trouble sticking to a budget, consider doing the following:
1. Consider increasing some of the areas where you continuously overspend. Samantha struggled with eating out. She is young, single and in a new city. Her income allowed for some eating out so she decided to eat out 5 days a week, bring her lunch into work and eat at home twice a week. She reduced her grocery budget and increased her eating out budget. Since part of the reason for her eating out was loneliness, I suggested having a potluck or pizza/home movie night with friends on one of the days when she eats at home to share the cost and for her to have company. Consider increasing your budget in areas where you constantly overspend. Remember, you have to make up for the overspending by decreasing spending in another area though.
2. Consider using cash for areas where you overspend. If you have areas where the problem is simply a lack of discipline as opposed to a need to increase spending, consider using cash. Some of the popular areas where people overspend are: groceries, clothing (this includes kids), eating out, entertainment, and gifts. If you overspend in any of these areas, consider using cash.
3. Find the method of tracking spending that works best for you. Samantha was tracking her spending with a great budgeting tool that she thought was too much work. She switched to her online banking budgeting tools, which streamlined the budgeting process for her. Her bank offered a robust app so she can stay connected to her budget online.
Consider how you want to access your info. If it is through your smartphone, consider online apps. If you want to not only budget but review investments and tackle debt, review online tools that can help you. If you are not sure where to start, consider doing what Samantha did and start with your bank’s online programs.
Remember to be patient when you start a new budget. There is almost always a need to make adjustments during the first three months. Hang in there and you will be a budgeting guru in no time!
This article was derived from the Financial Finesse Blog. Have a financial question? Send it to Ask Financial Finesse.