Guest post by Miranda Harwell, Executive Director of the Community Financial Education Foundation
I woke up Sunday knowing this week was going to be bad. First, my Blackberry died after a rainy night at the Paul McCartney concert. Monday, some nincompoop hit my car in Georgetown; thankfully his truck suffered the brunt of the damage. And today I got pulled over for turning right on red. That rent-a-cop gave me a $50 ticket. This week has been full of unexpected expenses. In my former life, this would have resulted in me selling a prized bag or piece of jewelry on eBay to make ends meet. So appropriately, the second part of my Reformed Shopaholic financial tips is meant to bring out the Scrooge in all of us.
1) Budget, baby!
Count your pennies, and the dollars will take care of themselves! This phrase comes compliments of quite possibly the wealthiest and most innovative man I know. Here is the deal – if you are serious about becoming financially sound, then taking account of exactly what your family is spending incredibly important. Budgeting your money, tracking your expenses and watching every dime, is the most certain way to be in control of your finances. Seems like a no brainer, huh? Preparing a family budget is terribly cumbersome and absolutely no fun, right? Well, not really. A budget does not have to be restrictive. It is meant to be more like a game plan- your monthly financial game plan.
Tips from a Reformed Shopaholic:
- Track your expenses for a month.
- Organize all those fixed expenses- mortgage/rent, utilities, car note, credit card payment, student loans, phone bill and anything else you know needs to be paid every month.
- Tally your monthly net income (take home).
- Estimate the costs for expenses you know are going to happen e.g. Groceries, gas, entertainment, clothing.
The best way to stay on track with your budget is to map out your financial game plan every month and WRITE IT DOWN. CFEF has a great budget worksheet that can help you get started. Check it out- www.communityfef.org
2) Saving Savvy
Recently, I read that 70% of working Americans live pay check to pay check. This honestly did not surprise me because I used to be a part of that 70%. This number obviously explains why credit card companies are eating people alive. Saving each month and setting savings goals is imperative. A good rule of thumb is to have 3 months of expenses in a cash reserve. You never know, when some idiot will hit your car, you have to buy a new $200 phone, or God forbid – you lose your job. Life happens and you have to be prepared for unforeseen events that can cost you big.
Key here: You have to set a savings goal.
Now that you have created a monthly budget, projecting potential savings will be easy. Pinch those pennies til they scream! Once you start saving, it becomes addictive. Trust me. I use Quicken to manage everything. For a free copy, go to my website www.communityfef.org and sign up.
3) Protect yourself.
Identity theft is one of the most common crimes in America. You know that commercial with the guy’s social security number posted on a billboard? I actually had the opportunity to meet Mr. Brad Davis of Life Lock several months ago at an event. Of course, the first question I asked was if that was really his social security number. Believe it or not, it is and he said you would not believe how many times crooks have tried to use it. Monitoring your credit report is very important. So important, I am making it the subject of my next Finance Friday guest column!
4) Reformed Shopaholic on Shopping.
Being a fashion plate has always been my signature, along with the red hair. Changing the way I think about fashion and shopping has been a challenge for me. But, absolutely worth it. Shopping is no longer a sport that fills my soul. I approach the event with a set spending amount, do not exceed and shop seasonally. Not weekly.
Tips from a Reformed Shopaholic:
- Nothing looks as good on as buying it on sale feels. I never, ever buy anything unless it is on sale.
- Trendy pieces are a waste. Odds are you will be over it in six months. Buy classic pieces that are versatile and never go out of style
- Buy accessories. My favorite movie quote is from Steel Magnolias, “The only thing that separates man from apes, is our ability to accessorize.” The perfect belt, dramatic earrings a chunky necklace has the power to change your entire look (and outlook).
- Save and buy a good bag. I have had the one I carry everyday for over a year and still love it. No need to change with the seasons, if you make the right purchase
- Shoes/heels for me are another wasted investment. I tear through them in a month. So, I usually rack up at TJMAXX or Marshalls and never spend more that $40.
5) Take care of yourself, but don’t be a diva.
Personal grooming is a huge part of feeling good about yourself. Trimming the fat on these expenses is tough, but a must.
Tips from a Reformed Shopaholic:
- Acrylic nails are out. Stop spending $50 every week to get your nails done. For me, a pedicure every couple weeks is non-negotiable, but I can save $30 and do my own nails.
- Leather skin is out. Tanning beds are a waste of money and bad for your skin. I love the new tanning foams. They do not streak, and leave you with a golden tan with no chance of questionable moles.
- A good stylist is a girl’s best friend. Find a reasonable one and go every 2 months. They will tell you six weeks, but you can stretch it out.
- Get moving and stay moving. You will feel great about your self and look great in your clothes. Even the old ones.
Being a savvy saver, spender and investor is the most important thing you can do to invest in your future. People that have money, got there by being smart and so can you. Make your finances a priority and it will certainly make your marriage, family and you much happier. Money is not the key to happiness, but it sure makes life a lot easier.
