It’s here! The New Year is upon us, complete with the requisite assortment of well-intentioned resolutions.
The usual suspects are probably all here: eat better, exercise more, lose weight, spend more quality time with the kids, finally read “The Great Gatsby” or another one of those Great American novels, what have you.
We’d like to give you some additional food for thought, however. If you have some wiggle room in your list of 2014 resolutions, why not consider your finances as well? It might not seem as fun as planning a camping trip to the Black Canyon of the Gunnison or Mesa Verde, but these budgeting and spending tips might just allow you to accommodate more of the fun stuff.
Start Small, and Work Your Way Up
Get a handle on how much you really spend. A good way to do this is to use a budgeting tool. If you keep track of every penny, you’ll have a much better sense of where your money is going — and what you learn might surprise you. We love Steuben’s lobster rolls and the tantalizing small plates at Linger as much as anyone, but impulse purchases — which include all those “honey, let’s just eat out” moments — add up.
Allow the guilty pleasures. Budgeting works like a diet. If you deny yourself all treats, a big binge might be on the horizon. So head Uptown or to the Highlands, or to your favorite shop in the Cherry Creek mall, on special occasions. Just not every week.
Keep your eye out for deals. Joining the Denver version of sites like Groupon and WeeklyPlus can help you find the less expensive version of virtually everything, from hair salons and day spas to restaurants and weekend getaways.
Grab the lunchbox. For all the worker bees out there: Pack a lunch. If not every day, then at least four days a week. Go crazy on Friday if you must, but you’ll be surprised at how much you save.
Engage your children. It’s never too early to start talking to your kids about how to manage money. Denver-area residents are lucky, because the Mile High City is home to the Young Americans Center for Financial Education, the only bank in the entire world specifically designed for young people ages 21 and younger. There, young people can take classes, attend summer camp, open their own savings and checking accounts, join the Youth Advisory Board, and even start their own businesses.
Set up an emergency fund. We’ve all been there—the month is humming along, and you’re paying all your bills reasonably comfortably, and then wham! Something happens. The car breaks down. An appliance quits. There’s an unexpected injury or illness. These can be massive setbacks, so it’s a great idea to set up an emergency fund. Keep the money separate from the accounts for routine household expenses, and make regular contributions so you’re won’t be blindsided by life’s twists and turns. If you’re just starting out, set an achievable goal—say, $1,000. Personal finance experts say that, ultimately, you should have the equivalent of three to six months of living expenses tucked away for a rainy day.
Set long-term goals. Give yourself at least one achievable goal for 2014. For example: You might not be able to pay off your credit cards in 12 months, but perhaps you can knock ‘X’ amount off the balances. Set your goals, and make the regular payments necessary to achieve them. Consider paying a specific percentage of the total balance each month, or perhaps a set amount (above the minimum payment, of course). The same goes for college and retirement savings, or making plans to purchase a house. Online calculators are a good place to start—they can help determine how long it will take to pay off existing balances, save for college, plan for your first home and save for retirement.
Remember: While all the number-crunching might seem intimidating at first, the money you can save may allow you more freedom. In addition to paying off revolving debt, managing your household budget better, or saving more for retirement, you also might be able to add something exciting and new to your life — perhaps an all-terrain vehicle or snowmobile to explore Colorado’s magnificent backcountry, or a camper or RV for that eagerly awaited tour of the national parks.
This is a time of tremendous hope and possibility. Happy New Year!
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A Denver Allstate Agent can help you make decisions to protect your financial future. Get in touch now.