Do you feel like your finances are being pulled into too many directions? Between paying off your mortgage and credit card debt to saving for retirement or your child’s college education, you may feel like you’re not achieving your financial goals. Here are five ways to help give your money a makeover this year.
Even with a limited budget, it’s still possible to achieve your financial goals — but you do need to prioritize! Add up your monthly necessities, such as housing costs and utility bills, and try to limit those expenses to under 50 percent of your monthly net pay, says Forbes. Next, allocate roughly another 20 percent to your financial goals like retirement or paying off your car loan, and then the remaining 30 percent is available for discretionary spending, such as eating out, clothing or entertainment, says Forbes.
It may be a good idea to figure out the amount you need to save each month for retirement, says Forbes. Use an online calculator to help determine your number. For example, a 30-year-old who wants to retire at the age of 65 may need to save roughly $770 per month to comfortably do so. Once you’ve determined your number, you may want to consider adding it to your monthly financial goals.
Have you ever looked at your closet or garage and thought to yourself, “How did I accumulate this much?” While shopping online sales and “buy one, get one” deals can be a great way to save money, unless you’re stocking up on paper towels, it’s easy to end up with items that you simply don’t need or won’t use enough to justify the purchase. When shopping, you may help avoid impulse buys by waiting 20 minutes to really think if this purchase is necessary, says MONEY.
Plan your meals for the week and then shop only for ingredients you’ll need. Menu planning may help cut down food waste and expenses by utilizing the same perishable ingredients multiple times during the week and helping you avoid purchasing items you don’t need.
Being honest about your finances may be awkward at first, but it’s better to have these conversations rather than waiting until something happens like an expensive car repair or a job loss to do so. You may want to come together on some common financial goals and visualize achieving them together. According to Forbes, it may be easier to accomplish these goals when there’s a set plan between the couple.
With a little preparation, you can start to makeover your money to help build a stronger financial future tomorrow.
Originally published February 28, 2012.