Cheers to another installment of your frugalous lifestyle transformation. Remember, You CAN blur the line between frugal and fabulous! All it takes are the right money concepts to improve your financial relationship!
5 steps to Financial Freedom
Here’s the game plan to detox yourself from bad financial habits and start living. oh so frugalously!
- Unsubscribe from mailing lists. This includes your favorite stores, living social, and groupon. Until you learn will power to say no even when you can afford to say yes, you need to remove the temptation. The latest and greatest sale of the season will not help you get a hold of your money! Out of sight out of mind.
- Identify unintended purchases by printing your last 3 months worth of bank & credit statements.Yes the latte, those cute shorts, impromptu drinks with friends, the extra massage this month. Ready for some sticker shock? Now add it all up. That’s the total options you purchased. Compare to the amount you saved in the last 3 months. How did you do? Don’t even tell me, I know, that’s why you’re here.
- Check yourself, before you wreck yourself. If you spent more on options than you saved in the last 3 months then guess what… you’re grounded for 30 days! I know you’re going to go through social/sipping/shopping/ Starbucks withdrawal.. But trust me this will be worth it!! You need a system that will get you saving and fast!
- Figure out how much you can save by taking the amount you spent in options over the last 3 months..
- Divide that number by 2
- Then divide it again by three.
- The answer you get is what you will commit to saving for the next 3 months.
Set it up as an automatic deposit straight from your paycheck to an online savings account…. This way its hard to access,withdraw and you can’t forget to do it!
Ex. if you spent 1000 in the 3 months divide by 2 would be 500, divided by 3 is $166 which you would commit to saving a month. And you still get to live, a little.
5.Time for a Budget Scrub! Sort of like going to spa except when you’re done your bank account will be saying ahhhhhhh!
Now the point here was to get you savings something systematically..since we did that in step 4 let’s just see if that number actually fits into your budget. (your 3 months statements will help you with this!)
- Identify all your fixed expenses, rent, mortgage, utilities, student loans, credit card bills, insurance
- Add your new savings commitment to your fixed expenses
- Identify all sources of discretionary spending, this is where the lattes, hair appointments, brunches, lunches and other go!
If it all works and you still have a few pennies left over then great you’re done!
But, if doesn’t…look through your discretionary list and see what can be reduced or eliminated. Premium cable that you don’t watch? All access gym membership you never use? Cell phone bill discount you never activated?
You want to get your budget to work without eliminating your savings commitment, do all that you can to keep that automatic deposit intact! Reduce it if you must, but never, ever eliminate it.
Is Financial Freedom one of your goals? How do you keep your finances in check? Let us know in the comments.
Contributor | Carrie Pink