Minding Your Money

The first step to minding your money is to watch its comings and goings, its inflow and outflow. Take a look at your income compared to your expenses. Are you spending beyond your means? If so, you can do one of two things: earn more or spend less.

After you take a realistic look at your situation, set some reachable milestones. Make sure that these goals are realistic, reachable, specific, and based accurately on your true income and outflow of money. Otherwise, you won't stay motivated and reach your goals. Examples of attainable weekly goals are to buy one less cappuccino per week, take your lunch to work once a week, or rent a movie twice a month instead of going to the movie theatre.

Review your assets and debts on a regular basis. Update your budget periodically to stay motivated. Even millionaires need to manage their wealth wisely or they won't remain millionaires.

Have goals

Have a long-term goal to strive toward, even if at times you can only plod along slowly. Long-term goals help keep you from being frustrated by short-term obstacles. If you don't have a vision of a cherished goal—a vacation, a home, comfortable retirement, college—you'll get bogged down in the day-to-day difficulties of life. Remember the old sayings, "You can't hit a homerun unless you step up to the plate," "You can't catch a fish unless you put your line in the water" and "You must be present to win." You can't reach your dreams if you don't try.

What financial goal would make you happier? Being debt-free by the end of the year? Having a certain amount in your savings account? A new car or home? Look at those goals and set them for this year, next year, and the next five years. Now chop those big, annual goals into twelve action steps and establish monthly goals. If you can, slice each of those monthly goals into four weekly action steps. Make sure that your goals are reachable and that you are willing to follow through.

Start with small changes

Start with small, easy behavior changes. You can make your own list, but here are few painless habits to get you headed in the right direction:

1. If you don't shop with a list, start making lists for every store you visit. When you go to that store, bring your list and don't buy anything that is not on the list.

2. When you go to the grocery store with your list, don't go when you're hungry. Have a snack before you go. If you're hungry at the grocery store, you'll buy twice as much stuff. If you bring your children, give them a snack first, too. This saves on whining and tantrums.

3. Try the generic and house brands instead of the brand names. You'll be surprised that they are often identical. Your doctor often prescribes the generic version of a drug, so don't hesitate to try it.

When you build in one of these small changes into your life, start to adopt another change into your life. Small steps will get you there. Just keep moving forward!

Make daily choices that matter

How you spend your money now determines what you will have in the future. Open your mind to opportunities to save money, and they will appear. Act on them and make them a part of your lifestyle. Your actions will either lead to your dreams or destroy you. Choose actions that lead you toward your dreams, not away from them.

Don't think about the temporary struggle necessary to achieve your dreams. Instead, focus on how wonderful it will be to achieve them. Of course, you will have moments of weakness; you may stray off course. The important thing is to get back on track. If you get stuck, whatever you do, don't go backward. Forgive yourself and move on.

Measure your progress through your daily choices. Be glad for even the smallest achievements. Reward yourself in small ways to keep yourself going. Plan a bigger reward for achieving larger milestone victories. But don't let your rewards put you back in debt again.

Success is 90% preparation and 10% perspiration

We need both preparation (planning) and perspiration (working the plan). If you prepare more, you'll perspire less. The same holds true for your savings and budgeting. A useable, well-designed budget creates a safety net for you. By preparing, you prevent unplanned perspiration.

This phrase hold true for each generation: First plan your work and then work your plan. When you strive, you will thrive.

Heidi Clingen is a long-time resident of Stevenson Ranch. She and Samuel K. Freshman are authors of The Smartest Way™ to Save, Why You Can’t Hang on to Money and What to Do About It. They offer only their opinion, which does not constitute professional, financial, or legal advice. To receive a copy of The Principles of Financial Independence or submit questions, email them at Heidi@TheSmartestWay.com