Okay, ladies, it’s time to make a plan.
I can confess that whenever I was in college and felt overwhelmed with an upcoming project that was due at 8am sharp the next day, I usually succumbed to the dramatics and had about a 5 minute freak out period. I’d scramble around, having a mini meltdown in anticipation of my failure to get it done, and once I had consumed most of my energy on those antics, I’d lie on my dorm room bunk bed, tuckered out, and a plan to tackle the project would slowly start to form. And usually, after I had my course of action all etched out, most of the stress would be relieved because I had steps in place to get me to my goal. Most of us react to our finances in the same way—it seems like a mountain that’s too high to conquer, so we go into panic mode and get weighed down by the stress of it all. I feel you—been there, done that. However, surrendering to that stress will get us absolutely nowhere, and if we want to get the most out of what we’ve been given, we need to make a plan for our finances as well. So roll up your sleeves…these are simple, but oh so important.
1) List out your Goals. Seriously, you need physically write them down. It’s not hard—heck, I think I did mine soaking up the sun by my pool last summer. But by doing this, you are creating constant reminders for yourself. And on top of that, it gives you a source to reevaluate every once in awhile (because no, you cannot just write them down and forget about them). In January you may have wanted to save to buy a Yorki Poo, but by June, you may realize that cleaning poo out of your carpet is just not your thing.
2) Prioritize. Got all those goals written down? Good. Now number them. That’s right, you need to see where your priorities lie. For me, two of my biggest goals were to buy a home (which I actually did this past June!) and have my dream wedding, and trust me, seeing as I am yet to even be engaged (and at the time I set the goal, I didn’t even have a boyfriend), you can guess which one took priority. And which one I actually accomplished first.
3) Take a Break. You need time to figure out what is actually reasonable for you, and you can’t do that if you have no idea how much money you’re bringing in and how much is going out each month. Many of you already in the job market may have a good handle on this, but for those just starting out, having a 3 month waiting period is a great idea. I did this when I started my job straight out of college, and it allowed me to see just how much disposable income I would have each month. After that, I was ready for Step #4.
4) Set a Budget. Please, please, please do this. Allocate your funds each month to necessities first—I include savings in this because, really, what’s more important—those goals you set out in Step #1 or getting a daily cappuccino? Then, allocate your leftovers to those “not so necessary” categories. Do I need to have a Blue Moon with dinner or another clutch purse? No—but you bet I want them and have created a budget for those extras. Anything left over you can do with what you wish—pad that savings account or buy yourself that Justin Timberlake concert ticket.
5) Stick to it! Easier said than done, I know. Trust me, I’ve failed many times…which takes us to Step #6.
6) Analyze and Adjust. And do it every month.My problem areas in my budget always seem to be restaurants and bars, which means I’m either greatly underestimating what I should spend there or I don’t have the willpower to not go. Either way, I need to adjust something. One extremely important thing to note, though: even though I spend more on restaurant and bars, it usually means that I’ve spent less in another area. Never spend more than you’re taking in…it usually means you’re borrowing from VISA or MasterCard and that $25 meal can suddenly turn into a $40 one when you’ve got interest tacked onto it as well.
Six easy steps, right? I really, truly hope that all of you who read my blog go through these steps. They take no time at all and without doing them, you will never get full control over your money situation. And hey, this could end up helping you fund that vacation to NYC or pay off your student loans earlier than originally planned. Worth it!
We’ll go through a few of these steps in later posts at greater detail – so until then, put on your big girl pants and get started!