The year is almost half over – are you on track with your savings plan for 2012? If not, I’ve got some tips to guide you back to where you want to be. As a CPA, numbers are my life, so I know of what I speak. Here we go.
1) Revise/Create Your Budget
This is a must, as a budget provides the best “big picture” view of what you’re facing over the course of the year. If you’ve already created a budget, I’m proud of you. But you have to revisit the numbers throughout the year to make sure you are being realistic in your expectations. If you’re a novice at budgeting, don’t panic. It doesn’t need to be complicated. Using Microsoft Excel, simply put in what you anticipate for each month’s expenses/income. Remember periodic expenses, like car insurance or rent increases, that don’t necessarily occur each month. Also, take into account any bonuses/raises that you expect to receive later this year.
2) Be Realistic
As I stated above, you have to be realistic when figuring out the numbers. Don’t lowball the amount that you expect to spend on your credit card if you know that you can’t stick to that figure. Likewise, don’t overestimate how much you can save without putting in some cushion for unexpected expenses. That’s the biggest problem people have when it comes to money – no matter what you plan for, it will most likely never work out that way. Your best tactic is to be prepared for extra costs, as they are almost always guaranteed to crop up.
3) Find a Way to Make Extra Money
The possibilities for this are a bit endless, honestly. Some of the ways that come to mind include holding a garage sale, selling some things on eBay, or writing for a site like Yahoo! Contributor Network (like I am here). None of these costs you any money to do. It’s simply a matter of your time and effort. Another way may be to take on something extra at work, if your employer is willing to pay you for it. Or, maybe you have a craft that you could put to use. Perhaps it’s time to try selling your handmade goods.
4) Trim the Fat
I’m not talking about your waistline, here. I’m talking about taking a hard look at what you spend your money on that is unnecessary and/or luxurious. For example, if you like to get a Starbucks coffee every day, even if it’s just a basic Tall coffee, do you realize how much you are spending over the course of the year? You could cut out 4 coffees a week, and just indulge on Friday, and you would save a couple hundred dollars by the end of the year. These are the things that you need to consider. Cigarettes are another biggie that cost quite a bit over time. I won’t harp on the health benefits that also come with desisting smoking. Figure out what you can live without, and resolve yourself to making it work!
5) Invest in Something
Maybe you have a little bit of cash sitting around already. But, is it making any money for you? I know that investing is scary to a lot of people, especially given today’s market and economy. But, there are some stable options out there that won’t tie up your money if you need it in a pinch. Consider things like tax-exempt and/or short-term funds. Even if your investment only makes 1% per year, it’s still better than making 0% per year by not putting your money in anything, right? The key here is to do your research before you make a decision. But, don’t let your cash sit idle, especially if you are confident that you won’t need it anytime soon.