This month we are focusing on how we can spur ourselves to finish strong and achieve our goals. Research shows, among the top goals people set each year is to get out of debt or manage their finances better. From the onset, it appears they are focused on how to bring in more income. However, they fail to consider the fact that being organised can also add money to your wallet in the long run.
The best financial advise I received as I entered the corporate world was “it is not what you bring in that will make the difference it is what you have left after you have taken care of all your expenses…”
This advise has since served us well in the way we handle finances in our home. In addition to ensuring that you keep your expenses at bay, there are also other things that one can do to organise their finances and ensure they get the most out of their income. Below I share the top three ways we use to ensure that we get maximum use out of our income and save at the same time.
1. Have a Budget
Although some people say a budget restricts them from getting what they want when they want it. I personally believe otherwise. In my view, a budget reveals what resources are available and how they can be used optimally. John Maxwell described a budget as “telling your money where to go instead of wondering where it went.” A budget so to speak draws the right boundary lines for you. Not only does it allow you to manage what is available, it also forces you to save. When I do our monthly budget, I start by giving (tithe), then I allocate to saving and finally I spend the rest. When there is a surplus after all expenses are taken care of, this automatically goes to savings. It is advisable to set aside some savings every month.
The internet is awash with free samples of budgeting tools. Experts recommend the quicken accounting programme www.quicken.com and the mint app at www.mint.com. I also recommend Dave Ramsey’s book The Total Money Makeover: A Proven Plan for Financial fitness. Click this link for an audio version. https://youtu.be/k3BkTOs7aQY
Personally, I use an excel sheet and update it every month to capture what will be needed for the coming month. Not only has having a budget allowed us to live within our means and be debt free, it also ensures we are able to give and have fun yet set aside money for rainy days and invest for the future.
2. Maintain a Wish List
With all the commercials before us, one is bound to give in and sometimes end up regretting especially if it causes one to incur debt. My solution to avoid all this is maintaining a wish list. I keep a list on my phone of things I want to have. Doing this does two things; it allows me to sit with want and delay gratification. It also ensures I think before deciding whether we really need the item and can afford it or let it pass.
I am from and live in Africa in most cases items are not available here or if they are, it costs an arm and a leg. A wish list enables me to keep an item in mind and take advantage when we travel to obtain it at a better price. I have used this strategy several times and the result is am able to surround myself with gadgets that simplify my life and yet they did not dent my wallet.
A wish list also comes in handy during the sales. You know how sometimes you justify a purchase because it was 70% off and you later realise you do not actually need it? Well with a wish list when the sales roll around all you do is refer to your list as a guide for what it is that you want.
3. Always have a plan
Peter Drucker was right “what you can measure you can manage”. I find that when I have plans in place it not only keeps me organised and focused but also allows me to live within my means. I love these two quotes by Benjamin Franklin:
“By failing to prepare, you are preparing to fail.”
“For every minute spent organizing, an hour is earned”
You maybe aware of the benefits of meal planning. Although it takes time to figure out what to cook for a particular period, the time you save plus the peace of mind it brings when you do this is priceless. You avoid wasting time or even preparing the same thing all the time which may cause your family to demand for a take out which ends up denting your budget.
Having a plan also means you know when to pay bills to avoid late fees as well as when to shop to take advantage of sales and stock up; instead of leaving everything last minute which causes you to shop for convenience and can be costly.
Taking the advise by Drucker if your goal is to get out of debt and yet when you look at the amount it appears too big. The solution lies in facing your giant and do what Financial guru Dave Ramsey asks his clients to do. He uses the debt snow ball analogy and asks them to list their debts from smallest to largest and then tackle them in that order. To him, winning with the small debts will give one momentum to go for the big debts.
Finally, remember since it is what’s left after clearing expenses that makes the difference, the key is to ensure you manage your expenses so you always have something left to save.
Freebie On The Way!
Next week we bring our series on achieving our goals to a close. I will be sharing a FREE Ebook entitled 3 Steps To Become A GOAL ACHIEVER If you are not yet subscribed please do so you can get this freebie.