What’s Your Personal Finance Dedication Level?

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100graphicwebreadyYou’ll hear me talk about it all the time.  Well, you won’t likely hear me at all, but read me write about it just doesn’t sound right. ;)  If you want to succeed at your personal finance goals and your personal life goals, you need to continually work towards them.  (Make some if you haven’t already)

And working towards your goals sometimes doesn’t get the required dedication that it deserves.  If you’ve set goals for your personal finance, but have never met one on time, you probably suffer from a low level of PF dedication.  If, however, you always meet your goals on time or early, you not only likely have a high level of PF dedication, you also need to set higher goals! ;)

In the course of my day to day life (and yours, I’d bet) I’m constantly tempted with things that I would like to have or places I would like to go.  And to get those things or go to those places costs money.  Money that might not be in the budget.  The temptation can sometimes be strong to put aside a budget item for this month so that you can have that “want” now.  Time for a self check.

It’s at times like that, that I try to remind myself of the goals that I have set.  That $50 gadget could be a $50 payment towards the next debt item in the debt snowball/avalanche/snowflake.  It could go towards retirement, or towards college savings, or towards down payment savings, or…  You get the idea.  Often, that little reminder is enough to keep me on track.

But it’s only because I’ve decided to have a very high level of dedication to my personal finance goals that it works.  If I had a much lower PF dedication level, it might not be so easy to turn down that gadget.  And I’d be that many more months behind schedule on paying off my debt.

What is your PF dedication level?  Do an inventory of the goals that you have set and decide now how much dedication you want to have towards those goals.  I’ll let you in on a little secret.  If you set a goal, you want it to be a 100% dedication item.  Maybe you don’t realize that, but (consciously, or sub-consciously) you created that goal with the intention of giving it 100% dedication.  And if you aren’t giving it the dedication that you intended for it, you’re letting yourself down.  And maybe it’s time to rethink your goals and set new ones.

Whatever the case may be, your dedication level to your goals is the deciding factor in meeting those goals.

image credit: Duchessa

Take a Challenge To Start the New Year Off Right

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If you would like to start 2012 on the right financial footing and want to do something that is attainable, consider taking a challenge.  Two of my favorite challenges are spending challenges and pantry challenges.  Take either or both of these challenges, and you will find extra money to do with what you please—to save for a new vehicle or home, to bulk up your emergency fund or to snowflake on your debt to get it paid off faster.

I have already spoken about the spending challenge, otherwise referred to as the No Spend Month as an excellent way to raise money for Christmas gifts, but it is also good to
do another time of the year.  Choose one month when you limit your spending for disposable items such as groceries, entertainment and gas by as much as 50% of what you typically spend.  You will find yourself being mindful of what you spend money on because there is very little money to spend.  If you normally spend $800 a month on groceries, entertainment and gas and you vow to slash that amount by half for one month, you now have an extra $400 available to meet your financial goals.  (I often have a no spend month in February.  The psychological boost of knowing it is the shortest month of the year makes it easier to stay the course.)

Save MoneyAnother challenge I try to take at least one month a year, but ideally two months a year, is a pantry challenge.  All of us have some extra items lurking in the cabinet.  I often buy ingredients for a certain recipe, but then if I don’t get a chance to make that recipe, I often still have the non-perishable items on the shelf a few months later.  With a pantry challenge, you try to use up what you have.  A common misconception is that you are not allowed to grocery shop at all.  That is not true.  Just like a spending challenge, you set a designated amount you want to spend.  Say you spend $600 a month to feed your family of five.  During a pantry challenge, you decide you will only spend $200 for the month.  That means you must try to make meals from ingredients you already have on hand.  This is a great way to not only save money but also to use up food that may be nearing its expiration date so it doesn’t go to waste.

If you would like a little extra money for your financial goals this year but you don’t have the time or inclination to work more hours, having a spending or pantry challenge may be the perfect solution to generating more money in a limited time frame.

Have you taken part in a challenge before?  Were you successful?

photo credit: 401K

Start 2012 Off Right

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We’re only a few days into the new year, and chances are that several of you have already broken at least one of your new years’ resolutions.  You’ve eaten way too much food.  You’ve skipped a day at the gym.  You’ve overspent on some key category.  Partially, it’s not your fault.  You probably made resolutions that wouldn’t stick in the first place.  They just aren’t specific enough.  Resolving to “lose weight”, “work out more”, or “spend less” are useless resolutions.  You’ve got to get specific with them.

Set some specific GOALS.

Instead of just making resolutions, create some specific goals to go along with them.  Instead of “lose weight”, set a specific goal, like “lose 15 pounds”.  Setting a goal not only gives you a specific benchmark to gauge your success, it also helps to motivate you to accomplish those goals.  Financially, we can use this to our advantage.  What spending events do you know will be happening in the coming year?  Maybe you’re like us, and will need a new set of tires for one of your cars before the next winter hits?  Set a specific goal to save so that the spending event doesn’t catch you with your proverbial financial pants down.  January is a terrific time to start planning your savings and spending goals for next Christmas.

Track your progress.

Setting goals doesn’t do you any good if you don’t track your progress towards accomplishing them.  Whether you’re weighing in to track a weight lose goal or tracking account balances to track progress towards a savings goal, you’ve got to track them.  There are plenty of ways to go about it.

  1. Piggy Bank and CalculatorCreate a list of your goals – This doesn’t have to be all that fancy.  In fact, you can do it on a sheet of paper if you like.  Just list the goals, the amounts your saving towards the goal, and leave room for a running tally of how much you’ve saved towards the goal.
  2. Track your progress – The accountants in the crowd will have a savings account with ledger balance entries that mark each penny for the goal that it belongs to.  If you’ve just got a list, just keep a tally on the list of how much you have saved.
  3. Keep your hands off – Be disciplined about your savings goals.  That money has a purpose, and the fact that you haven’t spent it yet doesn’t mean that it’s available for other uses.  Pick a high interest savings account and invest your savings. Once your money is in a savings, it stays in the savings account until the event/expenditure that it was saved for arrives.
  4. Spend what you’ve budgeted.  Saving for expenditures can be a great way to keep yourself to a budget. Once you’ve met your goal, that’s the money you have budgeted for the expenditure.  Don’t dip into your other funds to spend more on the event.  Keeping to your budget will help you reach your overall financial goals.

Setting specific goals and being diligent about tracking and saving towards those goals is a great way to improve your financial situation.  Even if you’re not sure that you can do it, I encourage you to give it a try with a few small goals.  Once you do, and you start to see your progress, you’ll find yourself making goals for all kinds of things in your life.  And, you’ll be accomplishing them more and more often.

Additional note:  I like to use my ING direct account to help save towards goals.  Their system allows for unlimited sub-accounts.  Once you’ve got an account set up, simply create a new sub-account ING Direct Orange Savings and rename it with the name of the goal that you’re saving for and the amount that you are aiming for.  e.g. “New Tires – $750″.  Once you’ve got them all set up, you’ll be able to easily see what goals you are saving for and what your progress is.  Many banks and credit unions will allow you to set up a limited number of sub-accounts, so you’ll have to ask at your institution if you don’t decide to use ING Direct, but I’ve never found another place that makes it as easy as ING Direct.

How do you plan, budget, and save for your financial goals throughout the year?

photo credit: taxbrackets.org