Your Financial Future: Control spending for a better 2024
Many people will be glad to see 2023 come to an end. Inflation has slowed from last year, but prices remain high. While the stock market has had a good recovery this year, many financial concerns continue. There are two major wars going on and the deficit continues to show non-stop growth. Many families feel financial stress.
We have little personal control of these situations. However, what we can control is our family situation. The labor market remains strong and many wages have increased. There are only two areas that control a family budget: how much comes in and how much goes out. Spending is the thing we can control the most.
At the beginning of a new year, many people make resolutions about changes they hope to make to improve areas of their lives. Most of these grand ideas are abandoned before the end of January. Good intentions without follow through have no value.
New Year’s resolutions are usually not successful because they are too big and staying motivated for 12 months is a long time. There may be a way you can make changes to your financial life if that is your goal.
First, you have to decide what is your why? This means why do you want to make these financial changes? Will it make retirement more enjoyable? Life less stressful? Whatever it is, if you can mentally picture in your brain the benefits of accomplishing this change, you are more likely to stick to them. This helps you see the value for any sacrifices you must make.
Next, pick one area to concentrate on, not making many changes at once increases your chance for success. Once you have determined your starting point, commit to a 30-day challenge to that goal. You can often accomplish this in 15 minutes per day. For instance, if your goal is to save more emergency money, what could you do? Keep a journal of all the money you spend each day. Many people do not understand where all of their money goes each month. Carrying a small notebook makes it easy to record your expenditures.
After a couple of weeks, decide where money is being spent that is not necessary. These funds can be redirected to a savings account. If you save $20 per week, you will have a thousand dollars saved at the end of a year. Emergency money has to be kept in something such as bank accounts where it is available at a moment’s notice when needed. It will not earn much interest, but that is okay for some of your money.
While having an emergency account at the bank is important, having too much money sitting in the bank, with our low interest rates, could be a poor financial decision. While CD rates have climbed some this year, most are short term and rates have decreased over the last several months. There may be some higher earning and safe options.
Improving your finances will take a little work, but can lead to a less stressful life. Albert Einstein once said, “Only a fool would think you can keep doing the same thing and get different results.” You can do this. Next week we will discuss some other little things you can do to improve your financial life.
Gary Boatman is a Monessen-based certified financial planner and the author of “Your Financial Compass: Safe passage through the turbulent waters of taxes, income planning and market volatility.”