ST. CROIX INSIGHTS
BY BRETT ANDERSON/ST.CROIX ADVISORS, LLC
Photo by Carlos Muza
- 20 percent savings
- 30 percent lifestyle
- 50 percent housing
If you conquer your spending and savings rates, you’re more likely to enjoy life down the road. But no matter how well your informal budget may be working, one way or another, you still need to start tracking the numbers.
So what three steps can you take to understand where your money is going and how you can finally plug your financial leakage?
1. Make technology your friend.
Some Saturday or Sunday while you’re watching a movie or a ball game, invest a couple hours in improving your finances. Try using software like Mint, a website like www.youneedabudget.com, or Google for a host of other options to choose from.
Don’t worry about what happened six months ago; this your opportunity to start fresh. Establish where you are spending money each day, week, and month. You can categorize your spending by restaurants, events, home items, and any other useful category, right down to stamps. If you watch your pennies, the dollars will follow.
2. Create a budget.
I know, the word “budget” makes you cringe. (I hate budgeting too, and I’m in the money businesses!) But we all need to establish a baseline for how much we really have to save, spend, or give away each month. To truly achieve financial peace, you need to create a margin between your income and your spending. This is so much easier when you make technology your friend.
By looking at the numbers in detail, you can finally see each day, week, or month where you are over- or underspending. I know what you’ll discover: you actually have more money than you thought you did, and you’ll wish you would have done this exercise years ago.
3. Understand your priorities.
Prioritizing your goals for your money is the only way to truly master it and direct it where you want it to go. Priorities can range from paying off your debt, saving 20 percent of your gross income, tithing, helping others, paying cash for that new car, and so on. I believe that more stuff means more money and more stress; look for opportunities to spend your money in creative, thoughtful ways, not just on the acquisition of more “stuff.”
Spending a few hours reversing the flow of your financial leakage will be empowering. Now, you can direct where you want your money to go and align your actions and values. Become the master of your money instead of letting your money master you.
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Ask yourself- can my portfolio support my lifestyle in my retirement?