During the summer, physical fitness is on the minds of many. While it’s great to want to fit into that bathing suit, it’s equally (if not more) important to pay attention to your financial fitness.
Summer is a great time to tighten the belt on your finances, whether you need to make some major cutbacks to your spending habits, or just tweak things a bit to squirrel away some extra cash. As with any diet, you’ll need to come up with a plan. Here are some things that you should consider as part of your strategy.
Figure out what you’ve been spending on a daily, weekly, or monthly basis. This will provide a baseline to help determine where you can cut back. Create a written log of all your expenses – both essential and discretionary.
Next, establish a budget. Look at all your sources of revenue and all your expenses. Again, write it down – whether on paper, an Excel spreadsheet, or in a personal finance software program.
Now, figure out where you can cut back. Are you spending $10 to $20 each work day eating out at lunchtime? Can’t start the morning without that store-bought specialty coffee at 5 bucks a pop? Add it all up and that’s a lot of spending each week that you could do without. You could probably cut those expenses in half by packing your lunch and making your morning pick-me-up at home.
Be realistic with your goals. Don’t restrict yourself to the point that you’re taking the joy out of life. If you’re miserable, it’s going to be hard to keep up with your financial savings plan. Leave room for some fun and special purchases. It’s okay to take a vacation, just plan one that’s less extravagant. Go out to dinner once in a while, but pass on the appetizers and mixed drinks. Shop for some new clothes, but take some time to bargain hunt to ensure you’re getting a good deal.
Be prepared for some setbacks, but don’t let them derail your savings plan. Unexpected expenses are going to pop up here and there, like replacing a flat tire or paying an emergency room bill. Creating a “rainy day” savings fund can help you overcome these types of situations.
Stay focused and be patient. It’s likely that your finances didn’t get out of shape overnight, so give yourself a reasonable amount of time to get fiscally fit again!