I’m very excited about today’s guest post! I attended some organizational classes last year by Marie Ricks and could not get enough of all that she had to teach (Enter to win her book “Organize as You Go” at the end of this post). One of her classes that I attended was on learning to control your finances and how to build savings on the income that you have, and I asked her if she would share some of her tips in a blog post:
Control Your Finances
When we get excited about saving money there are many things we can do to make a big difference in saving our dollars.
5 Steps to Build Savings and Live Without Debt:
At home with the kids? Instantly access any of these printable activity bundles to keep them learning!
1. Live on Less
First, the goal this next month is to spend less than that month’s income. For instance, Jerry earns $2,000/net per month. The couple’s short-term goal, therefore, is to spend less than $1,999.99 during that same month. The next goal is to put enough money in savings over the next year (twelve months) to be able to use last month’s money to pay this month’s bills. For Jerry’s family, this means putting away about $167/month x 12 = $2,000. When $2,000 is saved, they can now be one month ahead in their budget, a great first step in reducing financial stress. This habit means that you are living on less than you earn, are ahead of yourselves by one month, and are at the beginning of financial stability.
2. Stop Using Credit Cards
The second goal is to reduce and eventually stop using any sort of credit cards! This can be done with “plastic surgery” (i.e. cutting up all the cards but one which can be saved for emergencies). For the reluctant spouse, it can be done differently. Put the cards in the bottom of a plastic carton, fill the carton with water, and put in your freezer. The cards are available, but only with great effort.
The habit of paying cash (using a debit card, checks, or actual money) for goods will save more financial problems than any other discipline on a family’s part. Just because we want it, doesn’t mean that we have to get it. When the pain of payment and the pleasure of acquisition happen at the same time, responsible financial stability has begun.
3. Set a Spending Standard
Third, another goal is to set up a “standard” for spending. In this way, much of the past financial stress will be eliminated. No purchases are made without following the standards which have been agreed upon. For example, a couple might set up the following standard while they are in school. Each of them will get $25.00 in cash per month which they do not have explain to anyone as to how it was spent. Past that “fun” cash, each of them may spend up to $10 without consulting the other (except for groceries, which budget money is spent within the allowance they have agreed upon). They will not spend more than $100 without coming away from the store, discussing the purchase in private, and agreeing upon where the money will come from . They will not spend more than $500 without considerable research (i.e. consumer magazines and summaries), seeking the advice of others who have used the same product, and sleeping on it overnight.
4. Maintain a Budget
Fourth, the goal with the most work and a great deal of reward is to learn to maintain a budget. It doesn’t have to be fancy, but you should spend your money in your budget before you spent it in real time. One person is in charge of the weekly balancing, both meet once a month to discuss, give an accounting and make adjustments. Remember, Jerry’s family’s goal is to live on less than they earn. Your goal should be the same.
5. Rid Yourself of All Debt
Fifth, the final big goal is to begin a determined plan to rid yourselves of all debt, including consumer debt, vehicle debt, and finally housing debt. We’ll tackle this project during a future post. For now, let’s work on the first five steps to financial constancy!
Marie Ricks is a professional organizer and has an amazing blog called House Of Order. She also has published several incredible books, one of which she is giving away to one of you!
The contest will last ONE WEEK. Enter to win through ONE of two ways:
1. Subscribe to this blog. Comment below stating that you have entered the contest.
2. If you are already a subscriber, click on the following thumbnails and re-pin them on Pinterest! Comment below stating that you have entered!
Now it’s YOUR turn! What are your most successful ways to build savings or get out of debt?
“Piggy Bank” photo Credit: