A New Year’s Resolution On Personal Finance

A new year's resolution to clean out your receipt drawer is always a good idea.  Start fresh this year and take your personal finances seriously.  This last year was tough on everybody’s wallet.  This year start your financial life on the right path.

 

The best thing you can do for your personal finances is evaluate where your money is actually going.  Print out bank account activity, look up credit card bills.  Take a moment to contemplate what you are spending your money on right now.  Break down in your mind or on a piece of paper different categories.  Lump up similar items to evaluate how much you spend on them. 

 

Ask yourself the following questions:

• Is this how much I thought I was spending on this type of item?
• How much does this mean I spend on this type of item throughout the year?  If it is a monthly expense multiply it by 12, a weekly expense 52, etc.
• How else could I have spent that money?
• Is this item a priority?
• How does this translate into my wage?  If you make $15 an hour and you are spending $150 a month on coffee, is your coffee worth over a day of working.

 

Now think about how you would like this year to be different.  Ask yourself the following questions:

• What is a major financial goal that I have been putting off?  This could be the purchase of a new car, house or vacation.
• How much would it cost to attain that goal?
• Did I spend that money needlessly last year?
• What am I willing to do without in order to attain that goal?

 

By now you should have a pretty good idea of how you have been spending your money.  You should also have a picture of what you would like to do from now on.  The question remains how you go about changing your finances. 

 

There are a variety of ways you can keep track of your money.  The key is to find a way that works for you.  For some people visual clues work better, for others it is the act of using cash.  Still others prefer to keep reminders of the goals they are working towards.  Here are a few tips you can use.  Feel free to try them all until you find the way that works the best for you.

 

Always pay with cash, never use credit.  You can withdraw cash every week and put into envelopes assigned to different type of items or you can simply keep cash in your wallet.  Once the money is gone you must wait till the next week for more. 

 

Decorate your space with your goal.  Post a picture on your bathroom mirror, fridge or workspace about a house, car or vacation spot. 

 

Keep a spending journal.  Write it all down, fifty cents for a paper to $45 at dinner.  Write down what you spent, how you spent and what else you could have spent the money on.

 

Starting 2010 with a fresh perspective on your personal finances can make all the difference.  Decide now how you would like to be financially at the start of 2011!