Why is it so hard to save? And practically impossible to spend less? And even more unthinkable…to invest?
In theory, these seem like easy tasks. Put extra into your savings account, skip the trip to the restaurant, and follow the steps to smart investing.
But it’s never that simple in real life.
The easy part is getting pumped up with big ideas on revolutionizing your financial life. The hard part is doing the work. It takes being accountable.
A tidbit on accountability:
The majority of Americans are not staying accountable when it comes to finances.
In fact, “Americans have more personal debt than at any other time in history. Most people aren’t earning nearly as much money as they’d like to be earning. They’re spending too much, not saving enough, and struggling financially.” In Hal Elrod’s Miracle Morning, he acknowledges that Americans are facing a financial hurdle.
How did we get here? Poor financial choices, a poor economy, misinformation, mistakes, unexpected circumstances…there are a variety of reasons and they all add up.
For many of us, these reasons end up being excuses. Phrases like, “you only live once,” or “every time I get ahead something comes up,” are common mindsets around money. These words are powerful, and they affect the financial choices that we make.
Do you think that if your mindset is, “you only live once,” that you’ll be encouraged to spend irresponsibly to enjoy the moment? Or, if your mindset is that you’ll never get ahead, do you think that eventually, that will manifest into reality?
The truth is, you can do the things you enjoy while being financially responsible and you can get ahead even when things come up.
I used to ignore my financial situation with the hope that it would never bother me. If I ignored payments and debt that was too high, it would all go away and I could go on living life.
That’s not how it works. And oftentimes, when you ignore your financial situation, it only gets worse.
Taking control of your financial freedom means accepting hard truths and accepting responsibility. It takes being accountable.
I’m going to share the accountability steps that worked for me, so feel free to use them or tweak them! If you ever want more in-depth and personalized advice, stop into Casco FCU and see our financial advisor.
(1) Know your budget; (2) Start saving; (3) Check in.
Know Your Budget
If you’ve ever read a financial blog, I’m sure you’ve heard the tip “use a budget.” A budget tells your money where to go instead of wondering where it went. But don’t start with the budget. Decide on these things first:
1 – Do you like detailed or broad?
2 – Do you prefer using your phone, computer, or a notebook?
3 – What are your financial goals? Start with this year’s goals, and because you’re feeling ambitious, write your 2, 5, 7 and 10 year goals, too. Do you want to buy a house, car, take a vacation, start a business, buy a dog?
Writing goals will help you determine whether your spending habits align with your goals. Don’t skip this step, it’s an important one!
4 – When are you going to budget? Marking it on your calendar helps you follow through. The best results come from checking in on your budget weekly.
To start your budget, simply categorize your spending, figure out where you need to cut back, and put a cap on your spending so that you’re saving money, fulfilling all of your financial obligations, and leaving room for flexible, or “just in case” spending. Then come back, and analyze your spending habits.
You’ll need a way to keep track whether it’s with a budgeting app, an excel sheet, or a notebook. If you don’t keep track, budgeting will not serve you any purpose.
Once you get a complete picture of your spending habits, you’ll be able to answer these questions:
- Where can I cut back?
- Can I buy knock off brands without sacrificing value?
- What monthly subscriptions am I not using?
- How can I cut back on my electricity bill? Other bills?
- Am I saving enough? Can I put more toward saving?
Stay on track and repeat!
Start by making a list of things you’re saving for. You can refer back to your list of short- and long- term financial goals. This will remind you why you’re putting money away.
Then, categorize your savings. The two necessary savings accounts are a Savings Account and an Emergency Savings Account. A Savings Account is general – for a down payment on a home/car, vacation, small business startup, continuing education, etc.; an Emergency Savings is for unexpected events – vehicle repairs, technology issues, extended sickness, etc.
How do you start growing your savings account?
- Aim to save at least 10% of your net monthly income. If you can’t swing that, then start smaller and work your way up slowly.
- Live below your means.
- Keep the big picture in mind, remember your goals.
- Fund your savings accounts on a monthly basis. Automate the transfer.
The last step in staying accountable for your financial life is to CHECK IN!
Don’t ignore your finances.
You will get billed regardless of whether or not you look. You might as well keep an eye on everything to make sure you don’t get fees, incorrect charges, or overdrafts on your account.
Get in the habit of checking into your online or mobile banking when you have some down time. You’ll be way more likely to stay on top of your finances if you’re getting the full picture on a daily basis.
As always, share your thoughts! What helps keep you accountable for your finances? Share them with us! And, if you’d like more guidance on getting your financial life on track, Casco FCU members can benefit from the help of our Financial Advisor!
Thanks for reading,