Another year is coming to a close and a new year is just around the corner. Every year during this time I often reflect about the events of the past year. Ultimately, it comes down to one question: Are you better off now, than you were at this time last year? When I ask my friends and co-workers this question, they usually take a second to think about it. One of the first thoughts that comes to mind is how they currently feel about themselves. Are they happier? If not, why not? Are they proud of their accomplishments in the past year? If not, why not? If it’s been a tough year, why and what would they do differently? To steer them away from thinking about any perceived shortcomings of the past year, I ask about what they plan to do in the new year. What are their new year’s resolutions? If they don’t do resolutions, that’s OK too. I had a friend of mine say to me, “I don’t do resolutions, because it doesn’t work for me.” Why? “After a few weeks, I forget, or I give up on my diet. Then, I feel bad, and I don’t want to feel bad about failing a resolution. It just doesn’t work for me.”
I want to be a fan of New year’s resolutions, but I can relate to the frustration. A resolution is basically a goal. If your New Year’s resolution is to simply “be on a diet, lose 20 lbs, or make more money,” then you need an action plan. Without an action plan, resolutions are nothing more than just words. One of the goals I have for the new year is to find where can I trim the FAT (Feeble Actuated Transactions) in my budget. I had to look at the thesaurus for that one because “actuated” is not a word I knew existed, but I needed an “A.” Feeble actuated transactions means your unnecessary purchases, but I really just said it so I could use a catchy acronym–every blog needs those.
If you want to have more money in your bank account in the new year, then I encourage you to do what has worked for me; Spend LESS than you earn and SAVE the difference. This sounds simple enough, but in practice, it can be a little complicated. To start, you need to have a budget. A budget is a plan that identifies all earnings and expenses in a given time period. What you make versus what you have to pay for in a month. Having a budget is important because it’s a good way to track your money. No one cares about your money more than you do. So it is important to know where it is going. Spend less than you earn and save the difference.
If you don’t have a budget yet, today is the best time to create one. Write it down on a piece of paper, or jot it down in your phone. Identify all the costs and expenses (bills, utilities, rent/mortgage, credit card payments, car payments, phone payments, food, daycare, student loans, laundry, ice cream, Netflix, unmentionables) you have in a month, then compare it with what you make and see where you expect to be at the end of the month. It may be an eye-opening experience. If you’re in the red, or your expenses are higher than what you make then… give up. It’s hopeless. Just kidding! Having a positive cash flow is still possible! You will need an action plan. Digging out of the hole is possible. Just a few years ago, I was down thousands in credit card debt and I was only making $300 a month. My car payment was $312. Luckily it was during a time when I was living with my parents without a family of my own. I was able to dig out of this with some good luck (or grace from the big man upstairs) and lots of hard work and strict budgeting.
If the thought of drawing up a budget template makes your blood pressure go up, don’t worry! I’m that person who loves budgeting so much I made an extra template just for you. All you have to do is enter your data. See you soon!