7 Steps to Help You Have More Money This Year
It always happens right after the New Year.
Friends sport fresh haircuts, your boss rolls in in a new outfit, and your spin class is more crowded than it’s been in six months.
It makes sense. After all, ’tis the season for new beginnings, and there’s no better time to see what in your life requires a makeover.
Especially when that makeover means finding spare money you didn’t know you had! Today our goal is to help you find more room for the things you want in your life, and to see where you’re just throwing money away. So we enlisted Certified Financial Planner™ David Blaylock to explain the seven steps to help free up more this year.
1. See Where You Stand
For some people, a “budget” conjures up intimidating visions of spreadsheets and scattered receipts. But, trust us, it doesn’t have to be that way. Instead, think fun, think color-coded … think a budget automated for you.
After all, the first thing you may need is a bird’s eye view of your money so you know how much is coming in and how much is going out. (You’d be amazed how many people don’t know how much they bring home in their paycheck.)
That’s where using a tracking tool can help. For those who have a LearnVest.com account, a great way to do this is by categorizing your expenses in folders to see just how much, say, those weekly happy hours really cost you. This is also a free, easy way to see your net worth.
2. Know Your 50/20/30 Numbers
Great, a budget, you say. But how do I know if I’m overspending, or where to cut back? Simple: Divvy up your take-home pay according to the 50/20/30 principle. You can do this easily in your LearnVest.com account under the budget tab.
You’ll be able to see how much of your paycheck should be allotted toward your essential, fixed expenses (like rent); fun and flexible lifestyle expenses (like vacations or spa treatments); and priority goals like saving or paying down debt. Knowing how much you have to work with within those parameters can serve as the framework for other major money decisions for the year.
“It’s just a quick way to check on your budget,” Blaylock says. “So many people ask me if spending, say, $700 a month eating out is too much. Well, it isn’t too much if you are under [the 30 percent limit of] the 50/20/30 rule. It’s a quick and easy rule of thumb.”