3 Simple Improvements to Your Finances You Can Make in Less than a Month
By the time people come to see me, they’re usually in severe financial distress. They are always amazed at how quickly they can begin to turn their troubles around by making the following improvements, simultaneously:
1. Create a spending plan. Believe it or not, you can be well on your way to controlled spending within a month by simply taking the time to look at how you spent money over the last year. Examine bank statements, cancelled checks, and receipts to determine where you spent and how much. From there, you can create a spending plan with categories for spending that are important to you. My clients stop arguing with spouses about 30 days into this process and begin to feel in better control.
2. Start “spending” money for savings. Even clients who think they have nothing they can find at least 1% they are wasting. This comes from having a spending plan and then tracking their spending to see what’s really going on with the way they use their money. I have never seen anyone after about a month, who tracks their spending, not find at least 1% they can “spend” into their savings category on their spending plan. A paltry amount, you say? Perhaps, but there’s a psychological benefit that comes from saving even a small amount which can be empowering and eventually leads to finding more and more that can put towards saving.
3. Begin eliminating debt. In the same week that I have my clients begin creating a spending plan, I also have them gather all their debt information together so they can plug it into my debt elimination software to see which debt on their list they should concentrate on paying off first using Power Down techniques (go to www.moneymastery.com for more info on Power Down). By the first month, they know how soon they can be out of all debt. This motivates them to stay committed to controlled spending and continued saving all at the same time they are doing debt eliminating.