Savings Tracker: Free Savings Goal Tracker to Help You Save Money Quickly!

savings tracker

Free Savings Tracker

In this article you can download an awesome, free savings tracker. I will also share ways that you can make easy spending cuts in order to have more money available to save toward your awesome savings goals. And I will include some of the top things that you might want to save money for!

**Important note: Be sure to download your free savings tracker at the end of this article!**

 

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Simple Ways to Save Money to Reach Your Goal with a Savings Tracker

In this section I am going to list some of the ways that you can find the biggest savings in order to reach your savings goal. And then you can use the savings tracker to track all of the money you are able to save toward your goal from slashing these various budget categories!

 

Save money on entertainment.

There are many, many ways that you can save money on your monthly or yearly entertainment and related costs. This is the first place that I recommend that people look to if they want to save more money or need to reduce their expenses. Here are some of the biggest areas to cut costs:

  • Ditch your dish (satellite) or cable service. Find cheap or free alternatives instead.
  • Save money on your cell phones or smartphones.
  • Save money on your internet service.
  • Go to the movies less.
  • Buy fewer books and movies (go to the library instead :)).
  • Go to fewer and less expensive music concerts.
  • Go to fewer and less expensive sports games.
  • Spend less on personal hobbies. (Where could you make cuts? Any expensive hobbies you might give up, at least temporarily?)
  • Spend less on video and computer games.
  • Spend less on electronic devices.
  • Spend less money on toys for your sweet kiddos. (They probably have too many already; am I right? Or maybe I am just projecting my own family situation here. :)) Buy fewer toys, and buy them at thrift stores, garage sales, and the like. Consider doing toy swaps with family members and friends or members of your church.
  • Cancel your subscriptions to magazines and paid TV services (Netflix, Sling, and so on—again, videos from the library are free!).
  • Consider canceling your memberships to the gym, rec center, museums, aquariums, zoos, and the like.
  • Spend less money on recreational activities like skiing, bowling, miniature golf, playing arcades, and so on.
  • Spend less on your pets. (I know they are like members of the family for many people; but I don’t spoil our kids, and you can bet that I don’t spoil our pets, either!) See if you can trim spending on pet food, grooming, toys, accessories, and other pet expenses. 
  • Spend less on Christmas shopping.
  • Spend less on gift giving (see if you can make a gift, or give a heartfelt card or baked item instead).
  • Spend less on family vacations.
  • Reduce the amount allocated to your personal monthly spending money (your fun money or blow money).

 

Save money eating out.

The average family in America spends about $3,000 a year eating out. That means there is a lot of money that can be saved here! I know it probably sounds crazy, but we spend less than $300 a year eating out. And I don’t feel deprived! Want to know why? The reason is that that frugality has helped us to be able to reach other financial goals that we have—and to do it on one average income.

The best thing you can do to save money eating out is to simply do less of it. 🙂

But there are lots of other ways that you can save money eating out, as well! For example, you can share an entree. You can eat an appetizer for your meal.

You can buy ice cream on the way home instead of having dessert at the restaurant (you can buy a whole gallon of ice cream for the cost of an average dessert!) You can use coupons (check out Groupon, Living Social, and similar sites). And be sure to use the gift cards you receive to restuarants, as well!

Read this article to learn many more ways to save money eating out.

 

Save money on groceries.

There are so many—so many!—things that you can do to reduce your grocery spending. I discuss more than 70 ways that you can save money on groceries in this article.

But here are some of the things you can do to save the most money:

 

Check out these related articles:
31 Budget-Friendly Easy and Cheap Dinner Recipes for under $5
42 Cheap and Easy Budget-Friendly Meals for under $5
13 Ways to Save Big When Eating Out!
73 Easy Ways to Save Money on Groceries without Coupons!
59 Must-Know Tips to Slash Your Grocery Bill in Half!
151 Easy Ways to Save Money: Your Ultimate Guide to Saving Money! 

Save money on transportation.

 Another way you can reduce expenses in order to have more money toward reaching your financial goals is with your spending on transportation. The average car payment in America is close to $500 a month! Is is any wonder that nearly 80 percent of Americans are living paycheck to paycheck? Our savings accounts and emergency funds and retirement funds are sitting in our garages!

So here is what you can do to turn things around and save money on transportation costs:

Find more than 30 tips for how to save money on transportation costs here

 

Save money on housing.

For many families, housing is their single largest expense. But there are also many things that you can do to save money on housing. Here are some of my best tips for saving money on your housing:

  • Shop around to see if you can lower your homeowners insurance premiums.
  • Look into refinancing your home if interest rates have dropped. (But don’t lengthen the term of your loan! If anything, shorten it!)
  • If you are renting, find a cheaper place.
  • If you bought too much house, look at downsizing.
  • If you really want to save money on housing, consider renting out a spare bedroom (or bedrooms) either long term or on sites like Airbnb and Booking.com.
  • Save money on alarm monitoring with inexpensive services like SimpliSafe. (I love SimpliSafe!)

Check out this article for more than 30 ways to save money on housing.

 

Save money on utilities.

You can pretty drastically reduce your utility bill if you want to. Years ago I heard about a professor of economics who just couldn’t bear to see the money spent on utility costs go down the drain because he knew what that money could grow to if it were invested, and so he kept his AC up and his furnace down, and his family wore sweaters and bundled up during the winter and found ways to stay cool during the summer.

We haven’t gotten that extreme in my family (not yet, anyway; ha! :)), but it’s a little tempting! Because I hate spending money on things that have no lasting value, too! Sigh. In any case, here are some free and easy ways that you can save money on your utility bill:

  • Turn down (to 62 degrees or lower, if you can) and turn up your AC (to 78 degrees or higher, if you can).
  • Wash all of your clothes in cold water. Washing machines are so powerful these days they will still get your clothes clean even with cold water.
  • Hang your clothes out to dry.
  • Use your dishwasher less. Wait till it is full to run it, and consider using your dish drain and washing the dishes by hand.
  • Turn off lights, TVs, computers, radios, nightlights, and so on when they are not in use.
  • Unplug appliances and electronics when they are not in use.
  • Open your curtains during the day to let in the sun to warm up your house during the winter or keep them closed to keep out the sun to help keep it from heating up too much during the summer.

Also, read this article for more ideas on how to save money on utilities during the summer and this article for more ideas on how to save money on utilities during the winter.

Save money on clothing and shoes.

Some people just love to buy designer clothes and shoes. And they look really nice! But so does a paid-for beach house in retirement. 🙂 So we buy most of our clothes, for us and the kids, either on sale or from thrift stores or the classifieds. For now our kiddos are young, so they don’t know the difference (and I hope that even when they are older, they won’t care—and I hope they never do :)).

My sisters and I also swap clothes back and forth for our kiddos that are the same ages, which is awesome! I love to see the clothes that my kiddos wore on my nieces and nephews; it brings back such fun memories! If you have family or friends with kiddos the same age as yours, see if you can set up a kids clothing co-op!

Read this article to learn easy ways to save money on clothes.

 

Savings Accounts That Everyone Should Have

When you are considering what savings goals to work toward with your savings tracker, here are my top recommendations. Below I list the different savings accounts I feel that virtually every family (and everyone) should have (and that we ourselves have).

 

Emergency fund

Of all the savings accounts that every family should have and of all the things that it is important to save money for and record progress toward with a savings tracker, the emergency fund is I feel the most important.

Before you start saving for anything else (unless you have an immediate expense you know is coming, such as a crucial home repair), save up a starter emergency fund of at least $1,000.

Then after you have paid off all of your nonmortgage debt, go back to saving for your emergency fund until you have three to six months’ worth of expenses saved in your fully funded emergency fund. (I explain whether you should save three months’ worth of expenses or six months’ worth of expenses in this article on how to create an emergency fund.)

 

Vehicle maintenance and repairs

Another important category to include when determining what to save money for and track with your savings tracker is vehicle maintenance and repairs. We all love our cars, but the simple reality is that they need regular maintenance and eventually they need repairs. So rather than having to put the bill on your credit card the next time your battery dies or your brakes need to be replaced or your transmission goes out, pull the money from your vehicle maintenance savings account.

 

 

Vehicle purchase

An additional item to include when deciding what to save money for is the purchase of a vehicle. Do you want to know where most people’s wealth is? It’s sitting in their garage. Really. I don’t mean that our vehicles make us rich. I actually mean the exact opposite, because vehicles go the wrong direction—they go down in value. They depreciate. And yet the average car payment in America is more than $400 a month. Did you know that if you paid yourself that $400 a month for 40 years instead of paying it to the bank in car payments you would have invested $192,000 (can you believe that people spend that much on this depreciating asset?!), and at an average annual return of 11 percent, which is very realistic over the long term, you would have $2,907,969! Isn’t that amazing?

So instead of paying the bank that much money and all of the interest included when you finance a vehicle, set up a vehicle savings account and pay yourself a monthly car payment. That may mean that you want to sell your current vehicle that has a car payment and buy an inexpensive car to get around in until you can buy yourself a car for cash in a couple of years.

If you can pay yourself $200 a month for 2 years while you drive you $1,000 to $3,000 get-around car, you would have about $5,000 to buy a little bit nicer car. And then if you drive that car for two more years, you could then buy a $10,000 vehicle ($5,000 from the value of the current car plus $4,800 from saving $200 a month for 24 months = ~$10,000).

And then if you drive that $10,000 vehicle for four more years, you could then buy your next car, with cash, for $20,000. And because you’re going to buy a car that’s at least 2 to 4 years old, since you don’t want to take the huge bite that happens when you buy a new car (save that for when you have a net worth of at least $1 million and can really afford to take that kind of financial hit!), you can get a great vehicle for that price—and you’re just eight years into your vehicle saving plan.

If you want to buy a vehicle for even more than that (though personally I hope to never spend more than that on a vehicle unless it’s an RV or sailboat or something—I like to use my money for things that go up in value), you could save more, such as $300 a month. If you saved $300 a month for eight years and earned a little interest on that, you would have about $30,000 to pay toward your vehicle, plus the resale value of the current car you were driving.

And of course you could increase that by about $10,000 for every additional $100 a month that you chose to save—so if you wanted to buy a $50,000 vehicle with cash, you would need to save just $500 a month for eight years.

I know that having a car payment in America is normal, but you don’t want to be normal! Normal is broke and in debt and living paycheck to paycheck. Normal kind of stinks. So don’t be normal. Be awesome. And one of the ways you can do that is to get out of debt and never look back. Find out how you can save on the many costs related to car ownership by reading this article.

 

Down payment

Probably the biggest purchase you will ever make is your home, so a down payment is another important item to include on the list when determining what to save money for. If you hope to be a homeowner in the foreseeable future, you should start to save toward the purchase of your home. This is another awesome goal to track with a savings tracker!

To be able to save as much money as possible in your down payment fund, rent as inexpensively as you can. Rather than rent a posh place with all of the awesome amenities, rent an inexpensive (but reasonably safe) place for as little as you can, and save the difference. There’s a lot you can put up with if you know that it’s only for a certain amount of time (say two to five years, as you save up a good down payment) and if it’s for a great cause. To learn more about saving up to buy a home, check out this article.

If you know that you are at least five years (and the closer you get to ten years or more, the more this might make sense) away from purchasing a home, you might even consider investing the money in mutual funds to earn more money on your money.

You might even consider what we’re planning to do for our next home purchase—the 100 percent down plan! We are planning to stay in our modest, three-bedroom, 1,300-square-foot home for the next five to eight years (we’ve lived there almost eight years now) so that we can buy our next home (that will probably be close to twice the value of the one we live in now) with cash.

It’s maybe a sacrifice to stay in a smaller than average home with our three kiddos, but the payoff of never being in debt ever again is worth the trade-off. And as we save that money for the next several years, because it is a mid-term time frame of more than five years, we are investing the money in mutual funds in our Schwab brokerage account.

If you want to know how we choose the mutual funds that we are investing in to diversify our investments, enter your information below and I will be happy to email it to you, no strings attached.

Home repairs

When you buy a home, you not only sign up for 15-plus years of hefty payments but you also sign up for the upkeep and repair that a home requires. Home ownership (generally speaking) is definitely worth it, but you need to be prepared for the extra expense of home maintenance in your budget.

You should save about 1 percent of the purchase price of your home for home repairs and maintenance each year. So if you purchase a $250,000 home, that would be about $2,500 a year that you should save, or about $200 a month. This money can then be used for the deductible of your homeowner’s insurance if you need to make a claim, for example.

 

Note: You should consider putting your homeowners insurance deductible high enough that you never want to make a claim unless it’s something pretty catastrophic. So put your deductible at about $2,000 or more. That will keep your premiums significantly lower, but perhaps more important, it will keep you from making insurance claims that you should not make for things that you should instead pay for out of your house maintenance and repairs savings fund—or even your emergency fund if needed.

If you make too many claims, not only will your insurance premiums get raised significantly, but you might even get dropped from your insurance company. And because your claims are visible to other insurance companies (on something called the CLUE, or Comprehensive Loss Underwriting Exchange, report), making too many claims will also make other insurance companies less likely to be wiling to take your business.

So instead, self-insure by having a fully funded emergency fund and then by saving monthly for the home repairs that you will need to make throughout your time in your home.

To find helpful information on saving money on housing, read here.

 

Furnishings and appliances

It is also a good idea to include a category in your budget for furniture and appliances as you are determining what to save money for.

You need to plan to do periodic repairs and replacement of your appliances and furniture. And you don’t want to have to rely on credit cards to do that. So instead, save up regularly for these eventually anticipated expenses.

You’ll get a good feel for how much you need to save once you start paying attention to this, but if you’re unsure, start saving $50 a month. If you buy gently used furniture and appliances, you’ll get a great bang for your buck and be able to buy a lot of great things for $600 a year.

 

Christmas and gift giving

Another savings account to consider setting up and recording your progress on with a savings tracker is a Christmas and gift giving fund (or one for each).

The way many people act, you would think they don’t realize that Christmas (and the cost of it) are coming until at least Black Friday. But you can plan better than that! If you spend the average $900 that most families in America do, then you can save up for Christmas for just $75 a month. Sweet! So get it done.

Or, you might also consider cutting back on your Christmas spending so you can save less each month and put the money toward other great causes (such as your children’s educations or your own retirement—now those are gifts that keeps on giving). Read this article for ideas on how to save on your Christmas spending and this article on how to open an educational savings account for your child.

And then you might want to save some money each month for additional gift giving such as birthdays, weddings, and so on. Either that, or make it a line item in your monthly budget when needed.

 

Vacations

Another category to consider setting up is a vacation fund. And once you know the specific vacations you want to take, recording your progress toward saving up the money to take them with cash with a savings tracker is an awesome way to go, to enjoy a debt-free vacation!

 

The best kind of vacation is the one that doesn’t follow you home in the form of credit card payments! So set up a savings account to save up for your vacations. You can estimate how much to save each month by looking at how much you have spent in the last year or two on family trips and vacations, but $100 to $200 a month is probably a good place to start.

 

Miscellaneous/other short-term savings

We also have a savings account for miscellaneous purchases and expenses. You may want to have one to cover things that come up somewhat less frequently like purchasing electronics or bikes and recreational gear or things like that.

Learn what other things you might to save up money for.

 

 

Conclusion

As you use your savings trackers to track your progress toward your financial goals, you will be able to move yourself and your family steadily toward financial freedom. Best wishes as you work toward reaching that ultimate financial goal!

 

What are your most important financial goals currently? What savings goals do you intend to use the savings tracker for? I would love to hear your best ideas for what you are going to use your savings tracker for!

How to Use the Free Savings Tracker

The Savings Goal Tracker is fun and easy to use! All you have to do is write down what you are saving for, how much you want to save, the amount that you want to save each month, and your desired date for reaching your savings goal.

Then, write your savings milestones in that area of the worksheet. One thing you can do to help you stay motivated to keep on saving and to reach your savings goals is to celebrate when you reach certain milestones. So, for example, you might go out for ice cream as a family when you reach certain milestones. Or if they are bigger milestones or you have more room in your budget, you might go out to dinner or a movie. Or you might buy yourself a video game or book or favorite treat from the grocery store.

Knowing that you are going to get a reward is a great way to help keep yourself motivated to save and reach your financial goals! Sign up to receive the free Savings Goal Tracker below!

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Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

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9 Must-Know Tips to Save for Large Purchases (and Why You Need To!)

how to save for larger purchases

How to Save for Large Purchases

 In this article I am going to share my best tips for how to save for large purchases and expenses. Learn how to save your money for large purchases in order reach your important financial goals and reach your dreams!

 

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9 Must-Know Tips for How to Save for Large Purchases

When I first started budgeting, one of the things I couldn’t figure out in the beginning was how we were supposed to budget for larger purchases and expenses such as furniture, appliances, electronics, home maintenance, cars and car maintenance and repairs, and so on. I knew that people had to save (sometimes for years) for a good down payment before they were ready to purchase a home, but I didn’t connect the dots right away to figure out that all of these other items need to be line items in your monthly budget that you save up for, as well.

Maybe that’s partly because for all of the sample budgets I looked at, none of them had the categories of “car maintenance fund,” “car purchase fund,” “appliance replacement fund,” “house maintenance fund,” and so on. But eventually I heard advice such as save 1 percent of the cost of your home each year to go toward home repairs. And me being me, because I like to compartmentalize, I set up a house maintenance fund. And then I set up a car maintenance fund. And eventually a car purchase fund. And an appliance and furniture purchase fund. And so on.

Setting up these separate savings accounts (we use Capital One 360) is a real budget saver because it allows you to save for the various things that you want to without having to have a ton of paperwork to do it, it lets you see how close you are to reaching your savings goals any time you check the account balances, and it prevents you from inadvertently spending money on one budget category that you meant to hold for another.

Here are 9 important steps to follow when you are planning to make large purchases. By following these steps, your wallet and your bank account will thank you.

 

 

1. Commit to paying cash.

The sooner you commit to paying for things (all things) with cash, the sooner you’ll be able to really begin to take control of your money so that you can start really building long-term financial stability and wealth. When you commit to leave loans and credit card balances behind, you don’t have all that money wasted on interest payments to someone else, and you can use it instead to reach your own amazing financial goals.

 

2. Decide if the large purchase is really worth the money you would spend on it.

Review your budget to determine if you can really afford the large item (or items) that you want to save for. As mentioned in the point just above, make sure you can buy the item with cash in the needed timeframe, without going into consumer debt or relying on a credit card.

And then consider if purchasing that item is worth possibly overshadowing other financial goals. Most of us don’t have enough money to buy everything we want, so we have to choose our financial priorities. For example, you may have a dream of owning a speedboat or a ’65 Mustang convertible (OK, maybe that’s my dream :)). But do you really want that large-ticket item more than you want to help pay for your children’s college or max out your Roth IRA or retire in dignity?

For an interesting read on this topic, I recommend the book Your Money or Your Life by Vicki Robin (newly updated for 2018). It (the original edition) helped to shape some of my early ideas about personal finance and the value of work and money.

One of the ideas the author promotes in her book is to look at everything you buy in terms of the hours it takes you to pay for the item (as she puts in, in terms of the life energy spent). So, for example, if you make $30 per hour and you buy the latest smartphone for $900, was it worth the 30 hours of your life that you had to work to pay for it? If you buy a new $20,000 car, is it really worth working 667 hours?

 

3. Make room in your budget to save a certain amount each month for each large-item category.

Once you know that a purchase is in line with your values and your financial priorities, set a certain amount aside each month in a savings account for the item or category, even if you won’t use any of the money that month and might not need it for years. (If you know you won’t need the money for at least five years, you can consider investing the money in mutual funds.) And then don’t spend the money on anything else! Instead, let it sit in the savings account it’s been allocated to.

So, let’s say you want to save up to buy a new washer and dryer because you can tell the old ones are wearing out. So you set up a furnishings and appliances fund (this is one of the savings funds we have and that I recommend everyone have—learn what other savings accounts I recommend that every family have here).

And let’s say that you want to save $100 per month toward your appliance purchase, and you’ve shopped around to find the best deal you can, and you know the new washer and dryer together will cost about $1,450. So you know that you’ll be able to buy the washer and dryer in a little over a year (or maybe a little under a year, if you negotiate the price down because of the power of paying with cash).

And what if you want to save up to buy a nicer car? If you can save $300 a month, for instance, from no longer having a car payment, and you are driving a vehicle worth $2,000 now, you could buy a $5,500 minivan a year later. (That’s by saving $300 for a year; $300 x 12 months = $3,600 plus the $2,000 value of the current car = about $5,500. That’s still not an expensive car, I know, but it’s definitely one that can get you around and be safe and comfortable and all of those things.)

And then by doing the same thing, you can buy a $9,000 car a year after that. (That’s $5,500 + $3,600 = about $9,000.) Do the same thing for one more year, and you’ll be in a car worth nearly $13,000, or hold on for two more years, and you’ll be in a car worth close to $17,000 after just four years of saving up and paying for your vehicles with cash.

If you want to have a vehicle that’s even nicer than that, then keep saving in this same way, and even add more to your monthly car savings fund over time. In just five years you would be in a $20,000-plus paid-for vehicle, and you can keeping saving this way indefinitely.

 

4. Set up separate savings accounts for each of the categories you want to save for, and regularly transfer money into them automatically.

The best way to make sure that you don’t spend money you were saving for one thing on something else is to set up multiple savings accounts. The ability to be able to set up multiple savings accounts is one of the things that I love about my Capital One 360 savings account. We’ve been saving with them since 2004 (back before ING Direct was bought by Capital One), and they’ve been a great bank, with no checking fees, free bill pay, and automatic transfers to or from other banks or between savings accounts and your checking account.

You can transfer money into these savings accounts once a month, or you can transfer money every other week, or choose one of several other options that they offer.

Read this article for more information about automating your finances to reach your shorter- and longer-term financial goals.

5. Make some cuts in spending in other areas (at least temporarily) if needed to pay for larger purchases or to purchase the items more quickly.

If you need to make a large purchase fairly soon, then look for ways you can cut spending in other areas so that you can put more money toward the large purchase and buy the item sooner with cash. For example, you might reduce your food budget, limit your family’s eating out to one time a month, cut your cable, find ways to lower your utility bills, reduce your transportation spending, go on a clothes-buying fast, or do a no-spend challenge (you can save $1,000 in a month!). If you are regularly spending more each month than you bring in, you need to check out this article on how you can stop overspending.

 

6. Consider earning extra income to go toward larger purchases.

If you want to purchase the item or items more quickly than your current budget will allow even after reducing your spending, you can also earn additional income. There are even lots of side hustles and side jobs (like blogging! :)) that you can do right from home. Read this article to find ideas for earning extra income.

 

 

7. Consider buying the item used.

As you prepare to make large purchases, don’t forget to look at the possibility of buying the item used. Many used items still have a lot of life left in them, and the savings can be substantial! So don’t overlook this option when considering the best purchase for you and your family. You can look in the local classified ads, Craigslist, Amazon, eBay, garage sales, thrift stores, and more.

 

8. Shop around, and negotiate the purchase price.

Prices for items vary widely depending on where you purchase them, so take a little time to do your homework. Before you buy, shop around online to look for the best deals. Depending on the price of the item, this could save you hundreds or even thousands of dollars—the savings is worth the effort. And once you find the best deal for what you’re looking for, don’t be afraid to negotiate. You don’t lose anything by simply asking! Try out this phrase: “Can you do any better than that?” The more you experience you get negotiating for lower prices, the easier it will become.

 

9. Celebrate milestones along the way.

As you save for your large purchase or purchases, if you need the extra encouragement to save up and buy the item for cash rather than going in to debt for the item, reward yourself along the way. For example, if you’re saving to buy a $12,000 car with cash and you plan to save for two years to do that, you might go out to dinner every six months to help keep yourself motivated and on track. Or you could treat yourself to your favorite ice cream shop, or buy a new pair of jeans, or whatever will help you stay on track to meet your goal.

 

Conclusion

We live in a society where we have access to information nearly instantaneously. And with the availability of easy credit, many people can buy many of the things they want right when they first think of them, without having to save up for them and pay with cash. But making purchases with cash and avoiding debt is the only way to go for long-term financial success.

By saving up the money to make big purchases, you’ll be accomplishing great things, and you’ll be setting a wonderful example for your children and helping to set them up for a financially successful life as well. Because debt is a trap; don’t get stuck in it! And if you already have consumer debt, follow these steps to get out of debt as quickly as you can to find financial freedom!

how to save for larger purchases

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

Join Our Facebook Group!

Join our closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.

9 Simple Ways to Transform Your Money Mindset

money mindset

Money Mindset

Your money mindset is your beliefs and attitudes about money. Unfortunately, many people have a negative money mindset. Many believe they have to have debt to survive in today’s society. Or they believe that they will always live paycheck to paycheck and will never be able to get ahead financially.They feel that l will never be wealthy, or that it’s not really even possible to be wealthy anymore. 

But no matter your current beliefs about and feelings toward money, you can create a healthy, positive money mindset that will move you toward financial security and, ultimately, financial freedom.

 

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9 Critical Tips to Transform Your Money Mindset

A major reason that many people struggle with their finances for years and years—and sometimes for their whole life—is because of their money mindset. Many people learn their money mindset from their family life as they grow up. Sometimes they carry on the same beliefs as their parents. And sometimes, because of financial difficulties or problems in their young lives, they take an opposite view of finances than their parents.

Often we have money mindsets that limit our potential. In other words, our beliefs about money often limit what we are able to accomplish with our finances.  

In this article I am going to discuss 9 crucial things you must do to transform your money mindset. You can shift from a scarcity mindset to an abundance mindset—from a belief system of just wanting to get by to a mindset of building wealth and being able to thrive—by following these simple principles.

 

1. Let go of your limiting or harmful beliefs from the past.

Maybe you believe (or have believed) that you will always live paycheck to paycheck, and that that is normal and OK. Maybe you have even believed that you will always be broke. Maybe you have believed that you will always be in debt. Maybe you have believed that debt is a good and necessary tool to get by in today’s society.

Maybe you believe that if you don’t save or invest or prepare financially for the future that some fairy godmother will magically appear and take care of you in your golden years. (Unfortunately, what will happen if you don’t prepare is that you will end up being broke and scrimping by for potentially decades of your later life.)

But none of those things have to be your reality—unless you make them your reality by the choices you make.

You can stop living paycheck to paycheck starting today.

You can get out of debt and (finally!) start to save.

You can start to invest and build your own awesome financial future (no fairy godmother required!). 🙂

Millions of people have already done and are already doing it the good old-fashioned way, and so can you!

 

2. Focus on the future as you work to change your money mindset.

Once you let go of the beliefs you have had and step away from your past, start planning for an amazing financial future!

One of the first steps to help you create the financial future of your dreams is to start to budget. Because like it or not, you probably have limited resources, so you need to tell those dollars how to best work for you.

When you create your budget, make it a zero-based budget. In other words, allocate your monthly income down to nothing on paper. You may think that this seems odd; that it would be better to leave a little money as a buffer. And that is great, if you designate that money to be put into a particular savings account or something, like your emergency fund. But don’t just leave the money unaccounted for. The reason? It’s almost certain to get spent.

No budget? No problem! Sign up below to receive a free spending tracker and starter budget forms!

 

 

3. Focus on your why to help you have the motivation to change your money mindset.

One of the best things that you can do to change your money mindset and your current financial situation is to identify and then focus on your financial why.

Think carefully about the answers to these questions (you may want to write them down or talk about them with your spouse): Why do you want your financial situation to change? Why do you feel you need to pay off debt or start saving more money or investing for retirement? Why would you like to earn more money? What are your ultimate financial goals and dreams?

Your why is of utmost importance because it will give you the motivation to set crucial financial goals that will help you change not only your money mindset (especially as you are able to make progress toward achieving them) but also the trajectory of your life. With simple and realistic but amazing and far-reaching financial goals, you will be able to accomplish incredible things with your money that most people never will. That is sad, but it’s true.

Many people go through life half awake, never having the ambition or the discipline or dedication to really accomplish awesome things. But you are not that person! Or if you were, you are not anymore! 🙂

You are going to accomplish incredible things in your life by setting and steadily working toward simple but incredible financial goals like building up savings for emergencies and saving for large purchases and expenses, getting out of debt (including paying off that mortgage!), investing for retirement. helping to pay for your children’s college educations so that they will not be saddled with debt, and building wealth so that you can achieve ultimate financial freedom.

Check out this related article on how to save more money by identifying your financial why.

 

4. Realize that you can get out of debt and build wealth (and it’s not that hard to do; promise!).

Another one of the most important things you can do to change your money mindset and to build wealth is to change your views on debt. Rather than viewing debt as a tool or thinking that there is good debt and bad debt, consider debt as the thief of your financial freedom and your future wealth.

One of the healthiest things you can do for your money is to first get out of debt and then stay out of debt. That is because when you get out of debt—as one of my favorite personal finance gurus, Dave Ramsey, says—you free up your biggest wealth-building tool: your income.

By paying off all of your debt—including paying off your mortgage (as soon as possible! :))—and then staying out of debt you will have all of your income to use to meet your needs and build your wealth, instead of the bank’s. And ultimately, you will be able to achieve financial freedom.

Learn how to get and stay out of debt.

Start by making one small goal that you can work toward. For example, if you have a credit card with a $200 balance or an installment loan with a $350 balance, work toward paying that off. Start by throwing just $20 extra dollars a month at it, if that is all that you can do right now. But then watch that balance go down. Celebrate each small success that changes your financial trajectory. This will help you realize that you are in control of your financial life and that you can change your financial situation.

Once you are headed in the right direction, see what you can do to kick things up a notch. There are so many things that you can do to cut your expenses in order to work toward getting out of debt and building your emergency fund! And you can also find ways to increase your income, to work on the other side of that equation.

It will take some time and dedicated effort, but once you have gotten out of debt and created your full emergency fund, you will be able to easily find money in your income to be able to invest for an incredible future. Realize and accept (and embrace!) the fact that you really can be wealthy! In fact, you can set yourself up to become a millionaire with as little as $200 a month! This is not just a pipe dream; building wealth is a very realistic goal, given enough time and a little bit of discipline and dedication.

 

5. Be content with what you have.

Another mindset shift that will really help you to build wealth is to learn to be content with what you have. This will help ensure that you have a mindset of abundance rather than a mindset of scarcity.

I truly believe that one of the main secrets to building wealth and being financially successful is to learn how to be content with what you already have. Of course there are other important factors, but if you can’t be content with what you have and you always feel a driving need for more gadgets, more toys, more stuff—and better stuff—then you’re going to struggle at winning financially.

And simple math is the culprit. As much as virtually all of us would like to have all the money in the world to both buy the things we want and do the things we really should do for our financial stability and success, the truth is that most of us simply don’t have the money for both. And so we have to choose.

Learn 9 powerful principles that will help you to be more content (so you can save more money)!

 

6. Differentiate honestly between needs versus wants.

As you work to change your money mindset, begin to differentiate honestly between needs versus wants, and then make adjustments to your budget accordingly. Sometimes we do a pretty good job of justifying wants by calling them needs. But to truly differentiate needs versus wants, remember this: you need housing (unless you can live under a palm tree or something), but you don’t actually need a fancy or new or even nice home.

Similarly, you need food, but you don’t need restaurant food or gourmet food or to always eat name-brand food. You need transportation, but you may be able to get around with one car for a while (or even possibly no car, if you can use bikes or your feet or public transportation). And you definitely don’t need a brand-new or ultra-safe or super fancy car.

The better you can differentiate needs versus wants and base your budget on your needs first and then the wants that you can truly afford while still saving and investing adequately to meet long-term, crucial financial goals, the better off financially you will be later in life.

As you create your monthly spending plan or budget, allocate money for your needs first. That means designate money first for reasonable food, clothing, shelter, transportation, utilities, and other true necessities.

Then designate money to build up an adequate (three- to six-month; six months is ideal) emergency fund, to create sinking funds to cover future larger expenses and larger purchases (such as appliances and furniture and vehicles and so on), and to save adequately for retirement (save at least 10 but preferably 15 percent of your income for retirement as soon as you are financially able to).

Learn more about differentiating between needs and wants here.

 

7. Cultivate gratitude in your life as you work to change your money mindset.

Another one of the most important things you can do to change your money mindset and to help ensure you have lasting peace and joy in your life is to develop an attitude of gratitude.

If you are reading this blog article, you probably have power, running water, shelter, and all the necessities of life. You probably have a lot of what you want as well, like a nice home or apartment that you are living in, a nice car or two, nice clothes, high-speed internet, smartphones, and so on. In fact, you probably have everything that you need, and much of what you want.

Collectively, I would wager that the people on the earth have never had so much wealth as we have now. And when we remember that, when we remember how truly blessed we already are, it makes it easier to say no to a daily latte or eating lunch out every day or buying a nicer car or buying one more toy for your kids’ already overstuffed playroom. It also makes it easier to then work toward the financial goals that we know we should be working toward, like saving for an emergency fund and saving for retirement and for larger purchases to help us avoid debt.

For more on this important topic, read this article on the power of gratitude.

 

8. Understand that money is not evil.

Depending on your parents view of money or the views of other influencers around you, you may have grown up being taught (either overtly or covertly) that money is evil. If you are a Christian, you may even have been taught that money is the root of all evil.

But that is simply not true. The Bible says that the love of money is the root of all evil. In other words, putting money above things that should be more important like family and love of humankind is wrong, but money in and of itself is not bad.

You can do amazing things with money! If you don’t have money—enough money to provide for your own needs and then some beyond that—it is very difficult to give money away to help those less fortunate. By building wealth, you can have ample resources to give away to bless the lives of other people in need.

It is not money that is evil; it is what we do with our money that determines whether money is good or bad.

 

9. Set big financial goals.

If you do not set financial goals, your financial life will never go beyond being mediocre. If you want an awesome financial future, you need to set and then diligently work toward big financial goals.

That doesn’t mean the goals have to be overly difficult. You can stop overspending and stop living paycheck to paycheck now.

You can work steadily and incrementally on getting out of debt.

And then you can work on saving for your future. You really can retire comfortably if you will invest just $200 a month. And investing just $200 a month really is not too difficult given the income of most households if you will just have a little discipline.

On the flip side, if you want to have an even more comfortable life and retirement in order to travel and give more money away, for example, then set bigger financial goals! Invest more money every month, and watch your wealth grow over time. Pay off your mortage, and invest that money in sound investments, and you will be amazed at what that alone can do for your financial future. Continue to invest at least 15 percent of your income above that, and your money will grow even faster. You might decide to retire early, or you can pursue other goals that come with financial freedom.

 

Conclusion

As you follow these steps to change your money mindset, you will be able to move yourself and your family steadily toward financial freedom. First you will be able to achieve freedom from overspending, then freedom from living paycheck to paycheck, then freedom from the stress of having no financial cushion (savings), then freedom from being in debt, and then ultimate financial freedom—from having to work.

With ultimate financial freedom, you will get to the point where you can choose when and how you want to work, or if you want to work at all. Your time will be your own to accomplish the amazing things that you want and maybe even were meant to do in your life.

So transform your money mindset and go after your amazing financial goals!

 

What do you think are the most important steps for transforming your money mindset? Where are you on the journey to financial freedom, and how has your money mindset helped you get there (or prevented you from getting farther)? Let me know your thoughts in the comments below! I would love to hear your best ideas for how to change your money mindset!

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

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7 Simple Steps to Create Your Emergency Fund

how to create an emergency fund

How to Create an Emergency Fund

When you are working to get your finances in order, it’s crucial to understand how to create an emergency fund. It’s just the simple truth—unexpected problems are going to happen. And many of these problems are going to cost you money.

That’s why saving for emergencies isn’t just a nice thing to do—it’s an essential part of your financial well-being as well as a necessary part of your long-term financial success. So this article explains what an emergency fund is and how you can create an emergency fund to start saving for unexpected financial challenges.

 

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What is an emergency fund?

Before determining how to create an emergency fund it is important to understand exactly what an emergency fund is (and what it isn’t; see the section at the end of this article).
An emergency fund is a savings account that you set up specifically for when unexpected events happen that cost you money to resolve.

So, for example, an emergency fund can be used to pay for needed car repairs if you do not have enough money yet in a car maintenance fund to pay for such expenses. It could be used for home repairs that you haven’t yet been able to save up for, or for a sudden job loss, or medical expenses.

Unfortunately, there are many types of financial emergencies that can happen, but with a fully funded emergency fund, you can be prepared for these events.

Why do I need an emergency fund?

An emergency fund is crucial because you are going to have emergencies! You’re not immune to challenges and problems. The average American family faces a large financial setback (of several thousand dollars or more) at least once every 10 years, so you need to be prepared for that eventuality. And less severe financial hardships that cost $1,000 or less happen more frequently than that.

How much do I need to save in an emergency fund?

Your goal should be to reach a fully funded emergency fund (EF) of three to six months’ worth of expenses (not income) as quickly as possible. If you don’t know how much that is, then it’s time to create a monthly budget! 🙂 If you can, try to save this amount in 12 months or less, once you have paid off all nonmortgage debt.

In general, I recommend leaning toward a six-month emergency fund if you can. Personally, I think the extra peace of mind is important and may give you the courage to do the other things with your finances that you need to, like investing in good stock mutual funds for retirement.

However, if you have two incomes, you are in a stable job situation, you don’t have any major medical conditions in your family, you are not anticipating any major life events soon (like the birth of a child or purchase of a home), your house and your vehicles aren’t too old, and so on, then a three-month emergency fund may be fine for your circumstances.

Set up automatic transfers to transfer money into your emergency fund savings account every time you get paid or at least once a month until your EF is fully funded. Even if you’re in a situation where, because of a tight budget and circumstances where you or your spouse may not be able to take on much extra work, you can’t save very much each month, even $50 to $100 will add up over time and go a long way toward providing a needed barrier between you and Mr. Murphy.

Where should I keep the money in my emergency fund?

Your emergency fund money should be in a separate savings account at a bank where you have a (fairly) easily accessible checking account so that you can transfer the money over fairly quickly and use it if needed.

Though you probably won’t get as high of an interest rate, you may want to have your EF money in a brick-and-mortar bank, not an online bank, so that you have virtually instant access to it either by stopping at a nearby bank branch or by transferring the money from your EF savings account to the linked checking account so you can withdraw the money at any ATM with your debit card.

You could also use a money market account at your local bank or credit union for your EF. Don’t keep the money for your emergency fund in your checking account—that’s a sure way to end up spending it. Again, make sure the money is in a separate savings account. And even though it should be accessible in case you need it, don’t make it so accessible that you are tempted to spend the money for anything else besides emergencies.

If you decide to use an online bank, these are some good options for places to put your emergency fund:

Capital One 360. This is the account that we used to use for our emergency fund. (Now we get an even better interest rate from a local credit union.) We’ve been customers since the time that this branch of Capital One was ING Direct, and though I was sad to see ING go and though I’m not a fan of big banks, I have to say that our experience with Capital One has been great.

On the couple of occasions where we needed them to fix something with our account (both times were minor things we did that were our fault, not theirs), they did it right away with a simple phone call, and their customer service was great.

And they still offer one of the best savings rates around. You can see their . One of the things that I love about our Capital One 360 account is that you can open multiple (and by multiple, I mean we now have more than 20) savings accounts for the different things you want to save for beyond just your emergency fund. It’s awesome!

HSBC. We’ve simplified some, but there was a time when we collected bank accounts like some people collect postage stamps. And another one of the online banks we tried out was HSBC. They’ve been a good bank for us, and we’ve never had any problems with them. And similar to Capital One 360, you can open multiple savings accounts that all link to your checking account, and they offer rates far better than most the of the local brick and mortar banks.

Schwab. Schwab has been a great bank for us. This is the first brokerage firm we used, and it’s still where we do the bulk of our investing for our Roth IRAs, children’s education savings accounts (ESAs), and other long-term investing. Though their savings rate is not as high as some of the other online banks, there are no account minimums or service fees, and they offer unlimited ATM fee rebates worldwide. In addition, when it comes to investing their fees are very competitive and in some cases even better than Vanguard’s for comparable funds, which is one of the reasons that we went with them in the first place.

Ally Bank. We don’t have a bank account with Ally, but I have heard great things about them and know that they also have very good savings rates, so they’re another option you should check out if you’re shopping around for a great savings rate.

Dollar Savings Direct. This is another bank that I’ve heard very good things about. They too have one of the best savings rates around, with low minimum balance requirements.

How can I save for my emergency fund?

A crucial part of knowing how to create an emergency fund is understanding how you can actually save the money for the EF. Here are three crucial things you can do to save the money for your emergency fund.

Sell stuff. There are probably things around your house that you aren’t using that you can sell on eBay, Craigslist, or your local online classifieds. Or you could have a garage sale. By selling a few electronics or well-cared for furniture items, for example, you could be well on your way to a starter emergency fund of $1,000. Or maybe you have a motorcycle, jet ski, snowmobile, or similar item that could be sold. Have a car in your driveway that seldom gets used? Sell it and you might be pretty close to having a fully funded emergency fund.

Work to increase your income by getting an extra job or taking on a side hustle. There are so many ways that you can earn extra income these days. And many of them you can do online without ever even leaving your home. You could work from home as a customer service representative, become a mystery shopper or do online surveys or user testing, drive for Lyft or Uber, rent out an extra room on Airbnb, become a virtual assistant, or, my personal favorite, even blog for profit!

I talk more about many of these opportunities in this article on earning extra income. You could also do overtime at work or get a part-time job, or take on extra clients or work if you own your own business.

Here are 19 awesome (legitimate!) side hustles you can do from home!

 

Reduce necessary spending and eliminate (for a time) unnecessary spending. Cancel your cable or satellite service, cancel subscriptions, spend less money eating out and slash your grocery spending, do a spending freeze for a period of time, and make other cuts where you can. Treat funding your emergency fund like an emergency! (That way, when you have a financial setback or emergency, you’ll have accomplished this goal quickly so that you’ll be prepared.) For more information on how to reduce your spending, see this article.

What should I use my emergency fund for?

An emergency fund should be used only for—you guessed it!—emergencies. Don’t use it unless it’s an actual emergency. That could be an unexpected funeral, an illness, or something that goes wrong that you haven’t yet saved up money (or enough money) for in a separate account to cover (but that you eventually should!), such as a car repair or home repair or needed dental work or similar expense.

Expenses that you should plan for—such as car repairs and maintenance and home repairs and maintenance (once you have adequate funds in these savings accounts to start covering these expenses), a great sale, birthdays or weddings, family vacations, and so on—should not come out of your emergency fund.

 

Conclusion

Again, knowing how to create an emergency fund is an essential part of your overall financial success. And so is actually funding it! When you have an emergency fund with enough money in it to cover most things that could go wrong, there’s something in your psyche that changes.

You know that pit in your stomach that you get when you don’t have the money to pay for something you really need like a car repair or a new-to-you appliance to replace one that stopped working? With an emergency fund, that feeling will happen far less often, and when you get to the point where you have a fully funded emergency fund, that feeling will virtually go away altogether. A part of you that may never have relaxed before is able to.

An emergency fund means peace of mind, and that is priceless. Believe me, the effort (and maybe even sacrifice) it takes to get your fully funded EF in place is well worth it!

 

What questions do you have about how to create an emergency fund? Or what tips do you have? I would love to hear them! Leave a comment below and let me know!

 

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

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Get the New, Free Budget Planner!

free budget planner

FREE Budget Planner Printables!

Get the free budget planner printables to help you take control of your money today! The free Budget Binder with many helpful budget planner printables will help you to track your income and expenses, pay off more debt, spend less and save more, and reach your financial goals!

 

Note: Save the image above to Pinterest so that you can easily find these budget planner printables again later!

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Free Printable Budget Planner

 With the new, free budget planner, you will find tools to help you to manage your money in order to spend less, save more, and live better. Use these awesome free budget planner printables to get out of the debt and paycheck to paycheck cycle, and start making your money work for you!

 

In this beautiful budget planner, you will get these awesome printables:

  • Awesome, classically designed cover
  • 1 inch, 1.5 inch, and 2-inch spine label
  • Financial goals sheet
  • Monthly budget sheets
  • Income tracker
  • Expenses tracker
  • Debt payoff tracker
  • Saving goal tracker
  • Monthly budget review sheet
  • Notes page

Now, let’s talk about each of these free budget planner printables a little bit.

Classy Cover

You will love this classy cover for your beautiful Budget Binder!

Convenient Spine Labels

There are three sizes of spine labels for your Budget Binder: 1 inch, 1.5 inches, and 2 inches. No matter the size of your binder, we have got you covered!

Convenient Spine Labels

There are three sizes of spine labels for your Budget Binder: 1 inch, 1.5 inches, and 2 inches. No matter the size of your binder, we have got you covered!

Financial Goals Sheet

If you want to accomplish amazing things with your money and stop simply living paycheck to paycheck, you need to set and work toward awesome financial goals for an awesome financial future!

With the financial goals sheet, you can set short-term, medium-term, and long-term financial goals to help you spend less money, save more money, get out of debt, build wealth, and more!

As you set your financial goals, remember to make them SMART goals: specific, measurable, attainable, relevant, and timely. Check out my best tips for how to reach large financial goals.

 

Monthly Budget Sheets

These monthly budget sheets are perhaps the most important part of your free Budget Binder printables!

If you have been intimidated by budgeting in the past, you don’t need to be! Think of your monthly budget as simply the mini goals that are going to help you reach your own financial awesome. Remember—you are the boss of your budget. But then once you have created your budget, let it be the boss of you, to keep you on track financially.

With these monthly budget sheets, you will record your monthly income and expenses so that you can truly manage your money!

The main categories have been designated in order for you to easily plan and organize your budget, so all you need to do is add the specific budget categories that meet the needs and circumstances of your family.

Some of the fixed expenses (meaning, the amount generally stays the same every month) you may want to include in your budget are these:

  • Tithing
  • Charitable giving
  • Rent or mortgage
  • Renters insurance
  • Homeowners insurance and property taxes (if not paid with the mortgage)
  • Car payment
  • Automobile insurance
  • Life insurance
  • Health insurance
  • Dental insurance
  • Internet
  • Cell phones
  • Cable/satellite TV
  • Home phone
  • Gym or rec center membership
  • Retirement savings

In addition to these fixed expenses, you will likely have a number of variable expenses (where the amount spent fluctuates from month to month) such as the following:

  • Groceries
  • Household items (such as cleaning products, towels, and related items)
  • Eating out
  • Gasoline/fuel
  • Public transportation
  • Clothing
  • Utilities (electricity, natural gas, water, sewer, garbage)
  • Toiletries, makeup, and related items
  • Child care
  • Pet food and supplies
  • House maintenance
  • Home furnishings and appliances
  • Car maintenance
  • Education/tuition
  • Kids’ school or sport/music expenses
  • Entertainment
  • Electronics/toys
  • Recreation/sports and vacations
  • Hair care (stylist/barber)
  • Christmas and gift giving

Income Tracker

With the income tracker, write down all of the income you receive during the month, no matter how small. Even small amounts can help you accomplish big things over time!

Expense Tracker

With the expense tracker, you will record all of your expenses, how much they are for, and when they are due (if applicable). This form can help ensure you get your bills paid on time every month.

Debt Payoff Tracker

The debt payoff tracker will allow you to keep up-to-date on how much you owe for each one of your debts and when your target date is to get each one paid off. You will also see at a glance your progress toward reaching that payoff goal.

 Print a separate debt tracker page for each of your debts you are working to pay off, record your progress regularly, and you will be surprised at how quickly you are able to crush your debt and get it out of your life!

Savings Goal Tracker

This is another powerful free Budget Binder printable in your financial toolbox. Use a separate sheet to keep track of your progress toward each of your awesome savings goals.

On each sheet, record the savings goal amount, how much you have saved already, how long you plan to save for (if known), what you are saving for, and why you are saving for this financial goal.

Don’t overlook or neglect to complete the line for why you are saving! Your financial why is very important because it will help give you the motivation to reach your financial goals!

Discover how determining your financial why can help you to save more money. And get my best tips for how to achieve your financial goals.

Monthly Budget Review Sheet

On this free Budget Binder printable sheet, record areas where you struggled with keeping to your budget or what you could do better for next month. Also record financial goals for next month that your Budget Binder can help you to accomplish!

Notes Sheet

Be sure to record here any notes that will help you to manage your money better and reach your financial goals.

Conclusion

With these awesome free budget planner printables, you can finally make budgeting work for you! By identifying and tracking your expenses, listing your income and expenses, and including money for saving and paying off debt, you will succeed at your financial goals! It will take some time and consistent effort, but you can do this! And your future self will profusely thank you! 🙂

If you want to be able to have financial peace and stability and eventually reach financial freedom, you have to be able to have money left over after your spending to save and to invest.

And in order to do that, you have to master a budget or spending plan. If you want to win financially, as with any area of your life, you have to make a plan and stick to it.

Find information on how to stick to your budget here. And you can find the complete  Beginner’s Guide to Budgeting.

What questions do you have about the Budget Binder budget planner? Have you tried to budget before and not been able to stick with it? What are your biggest budgeting challenges or hurdles? Leave a comment below and let me know!

 

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

Join Our Facebook Group!

Join our closed Families for Financial Freedom Facebook group to get support and share ideas for how we can all improve our financial well-being by earning more, spending less, saving more, and investing more and reach our financial goals. You can do this! And we are here to help.

13 Top Tips to Help You Stick to Your Budget

how to stick to a budget

How to Stick to a Budget

In this article I share 13 simple tips to help you learn how to stick to a budget. Being able to stick to a budget or spending plan is crucial for financial success, so read on to learn how to make this goal a reality!

 

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13 Best Tips for How to Stick to a Budget

I know that being able to stick to a budget isn’t easy. If it were, everyone you know would be doing really well financially and building wealth. Instead, nearly 80 percent of Americans are living paycheck to paycheck. And close to the same percentage of Americans have less than $500 in savings. I don’t know the statistics showing the number of families who budget, but I would guess that there is a strong inverse correlation between the two. I would bet that most people who budget, if they have been doing it for a while, have built up at least a decent-sized emergency fund so that they aren’t on the very brink of financial disaster.

If you find the idea of committing to live by a budget difficult, keep this in mind: you are the boss of your budget. You get to decide what you want to spend your money on! 🙂 If you want to spend $700 on entertainment each month and $200 on housing, as long as that provides adequate housing for your family, then that’s great. But do you have to make your budget balance—you can’t be going into the red anymore. Because that will never lead your family to where you ultimately want it to be.

Creating a budget and then committing to live by it is so important because it’s the foundation of your financial stability and wealth building. If you don’t know where your money is going and aren’t being intentional with how you are spending it and saving and investing it, you won’t be able to attain financial prosperity. In this article I discuss 13 things you can do that will help you to stick to your budget in order to reach your financial goals.

 

1. Identify your financial goals and dreams—know (and remember) your why.

W-h-y. Those three letters are incredibly powerful. Understanding your financial why may be your most powerful tool for curbing your overspending and getting control of your money, and that’s why we’re talking about it first. Because in order to change old habits and start new, better habits, we’ve got to have a very strong motivation—and that motivation, for many people, is their why. To learn more about the power of why, I highly recommend the book Start with Why, by Simon Sinek. It is (and all of his books are) an excellent read.

In order to be effective, your why has to be powerful—more powerful than your urge to buy stuff or do things you can’t really afford—or better put, things that jeopardize your long-term financial stability or goals. Maybe your why is to have financial security, have one parent be able to stay home with your children, be financially independent early on in life, live in comfort (or luxury) in retirement, be able to give very generously to worthy causes, be an exceptional financial example to your kids, or be able to retire early to travel, volunteer, or spend time with your children and grandchildren.

Take some time to sit down with your spouse and determine your financial whys—why is it worth getting out of debt? Why is it worth saving for retirement? Why is it worth saving for your children’s college educations? Why should you stop using your credit cards to buy things you can’t afford? Why should you pay off your home early? Why should you retire early(!)? Once you’ve talked about your whys, talk about the goals and dreams related to those whys, and make plans to accomplish them! Turn your whys into will-dos, and get after it!

For me, my financial whys are very strong motivators. My current financial goal is to be able to get this blog to the point where it can replace my full-time income so that I can be home all day with our three little cherubs. Even though I love my current job, being able to be home with our children is something I want even more, and so I’m willing (very willing, really) to make sacrifices (of sleep, mostly, and leisure or “me” time) to make that hope and dream a reality. And then they aren’t really sacrifices at all—just choices to be made.

When your motivators are strong enough, you will choose to stop overspending and to get control of your money. You will stick to your budget. And I’m here to help you every step of the way.

 

 

 

2. Plan your budget with your spouse so that you can work together to stick to a budget.

If you are married, then you need to be on the same page financially with your spouse in order to stick to a budget and win with your money. So if you haven’t done so already, sit down with your spouse to create your first budget. Or if your sweetheart really isn’t into numbers, then you could create the budget, but then make sure that you go over and agree to it together. And make sure that your spouse gives input and even changes some of the allocated amounts. Because without true buy-in, your spouse will likely (intentionally or unintentionally) sabotage your efforts to stick to your budget.

 

3. Plan a (slightly) unique budget for each month.

You don’t have to re-create your budget from scratch every month, but you do need to adjust categories as needed to reflect the circumstances for each month. This will definitely help you be successful as you work to stick to your budget.

So, for example, your rent or mortgage payment, cell phone payment, and insurance premium will probably be the same every month, but your utilities and fuel costs will likely fluctuate somewhat from month to month. You’ll probably pay more for utilities in the summer and winter than you do in the spring and fall. So you’ll need to plan accordingly.

And if you have a wedding or birthday to attend next month or if it’s Christmas next month, you will need to plan for those kinds of things, as well.

 

4. Plan ahead for this month’s unique expenses in order to stick to a budget.

Going along with the point just above, make sure that you sit down a few days before each month begins, and have your calendar in hand. Look at upcoming events so that you can account for their associated costs in that month’s budget. If you’re going to be doing some traveling or going on vacation, plan for that. If you have a high school or college graduation, plan for that. If you know you want to replace an appliance or piece of furniture (and you have saved up the money to do so), make sure to account for that. Doing so will help you keep your budget balanced and avoid overspending.

5. Be willing to be flexible to help you stick to a budget.

Even though you are going to be creating a unique budget for each month, even then you still need to be flexible. Sometimes things come up later in the month that are outside of your control that you just can’t anticipate. So when that happens, take money from another category or categories, so that your budget still balances. Once you start saving for larger expenses and purchases, you could take the money from one of those savings accounts if needed. Or if it is a true emergency and you don’t have other money saved up yet and you can’t take the money from another budget category for the month, then take the money from your emergency fund.

 

6. Shoot for progress, not perfection as you work to stick to your budget.

As you are working to stick to a budget, realize that when you’re new to budgeting, it takes some time to get the kinks worked out. So give yourself some grace. It’s probably going to take you about three months of trial and error before your budget starts to really work. So don’t give up! Your budget is a key to your financial success. Hang in there, and if you have questions or need encouragement, visit our new Facebook group.

 

7. Be realistic about your current spending habits, and work from there.

To help you stick to a budget, don’t try to change things too drastically with your spending right at first. If you’ve been spending $500 every month eating out, you probably shouldn’t drop that to $50 (unless you have a really strong motivation and strong will).

Similarly, if you haven’t been saving anything, you probably don’t want to budget to save $1,000 next month. Take reasonable steps as you work to improve your finances. Spend a little less eating out, and then a little less, and then a little less. Contribute a little more to your 401(k), and then a little more, and then a little more. It’s OK to take a few months (or maybe even longer, for really big changes) as you work to change old habits to better ones.

 

8. Automate your finances as much as possible to help you stick to your budget.

One thing that can really help you to make financial changes and stick to a budget is to automate your finances. That way, you’re not left so susceptible to temptation. Right after you get paid, transfer money directly to pay extra toward debt, into savings accounts, into your Roth IRA—take care of your financial goals by funding them automatically. And then live on what is left. The envelope system (discussed a little more below) is an excellent way to help you do this, especially if you are regularly tempted to overspend.

You should automate your finances in order to get paid (through direct deposit); save for emergencies, large purchases and expenses, and so forth; invest for retirement; pay bills; save for kids’ college; and more.

Read this article to learn more about automating your finances.

 

9. Use an envelope system, and pay for purchases with cash to help you stick to your budget.

One of the best things you can do to stick to a budget is to use the envelope system as you manage your money. The envelope system is where you take the money that you have allocated for a certain category in your budget and you put that amount of cash in an envelope. Then when you spend money in that category, you spend it from the envelope. And when the money is gone, it’s gone—no more spending in that category till you replenish the envelope from your next paycheck.

Some areas that you’ll probably want to use cash for in your budget include food (both groceries and eating out), entertainment, clothing, and personal fun money. You can use envelopes to keep your cash for the week or month or a wallet with different compartments.

 

10. Know how to avoid budget busters so you can stick to a budget.

A big part of sticking to your budget for many people is avoiding their spending triggers. And another crucial aspect of sticking to your budget is planning ahead. You can’t keep to your budget—or win with your money in general—if you don’t make a plan and then follow it. Here are some things you can do to avoid budget busters and stick to plans that help you spend less and save more.

  • Skip Starbucks and stay out of restaurants (most of the time).
  • Plan your meals and shop with a grocery list (and stick to it!).
  • Reduce your number of shopping trips. Shop online (with a list, for the things you truly need) when possible.
  • Pack your lunch for work.
  • Stay out of department stores and avoid browsing online stores.
  • Avoid watching commercials.
  • Leave your kids home when you go shopping.
  • Spend less on hobbies, memberships, and subscriptions. Cancel store catalogs.
  • Avoid impulse buys.

For more ideas, read this article with more than 20 tips to reduce your spending.

 

11. Tell yourself “Not yet.” rather than no to help you stick to a budget.

If it helps you to not feel like you are depriving yourself so that you are better able to stick to your budget, when you are in a situation where you want to spend money on something that’s not in your budget, tell yourself “Not yet” rather than no. Tell yourself that you can write it down on a wish list, and if you still want it, you can work it into next month’s budget (or even in this month’s budget, if you adjust spending in other areas—but make yourself wait at least overnight).

 

12. Avoid commercials and other advertising as much as possible to help you stick to a budget.

I know I mentioned this in the bulleted list above, but I think it’s worth repeating here in a little more detail. You won’t buy what you don’t know exists or what you don’t think about, so avoid commercials and other advertising as much as possible. DVR your favorite shows so that you won’t have to watch the commercials, for example.

Or stop (or really reduce) watching TV altogether. (Do you really think you’ll miss that much? There are so many other wonderful things to do!) When we moved to our current home, it didn’t have a TV antenna, and since we didn’t watch much TV anyway and could watch the few things we do watch online, we have never gotten one.

And let me tell you—it’s much easier to avoid being tempted to go to a movie or buy a gadget or toy or go check out a new restaurant when you don’t even know they exist.

 

13. Keep your financial goals in mind to help you stick to your budget.

Remember those goals and dreams we talked about above? To help you stick to your budget, create ways to help yourselves remember them. Put up visual reminders, like a picture of your retirement beach house or your paid-for-with-cash bass boat or RV or luxury car. Put up construction paper loops representing the amount of debt you’re working to pay off.

Keep a copy of the last payment stub (or create one) for your vehicle or mortgage, and plan to burn it when you get it paid off. Write in a prominent place the name of your favorite charity or cause that you want to support or the charitable foundation you want to one day form. Put a picture up of your children that will help give you the motivation to make the changes needed to live on one income so you can stay home with them.

Whatever your family financial goals are, find ways to keep them firmly in the forefront of your mind so that you can continually work on them and so that you will have them to fall back on when you’re tempted to overspend or bust your budget.

If you need help to track your progress toward your financial goals and keep yourself accountable, it might help if you use a program such as You Need a Budget (YNAB.com). It’s a great, user-friendly budgeting tool with a lot of awesome features.

Or, especially if you have begun investing for retirement or intend to soon, you should sign up for my favorite money tracking app, Personal Capital. Personal Capital is a free app that not only tracks your spending for you and lets you see all of your bank accounts and credit card accounts but it also tracks your investment accounts, as well. So it provides a complete picture of your overall financial situation and helps you monitor your progress  If you’re investing in a Roth 401(k) or IRA or have other investments, you should sign up for a free account.

 

Conclusion

I’m not going to lie and say that sticking to a budget is always easy for everyone. It takes diligence and practice and discipline. But I will tell you that it is completely worth it. Remember—you are the boss of your budget. You decide what you want to spend your money on. A budget just helps you to face the reality of your situation.

But by sticking to your budget, you can make serious, consistent progress toward reaching your goals. And over time, I promise you—the results are amazing! The financial peace you feel is incredible. The contentment you feel is awesome. So let’s do this! I’m here to help.

 

What questions do you have about how to stick to a budget? What tips or tricks have you found that have helped you stick to a budget? Leave a comment below and let me know! I would love to hear your thoughts!

 

 

Invitation to Share

Was there something in this article that inspired you to change something about your money? Are there ideas or tips that you feel could help others? Would you please take a minute to share this article via email or social media? I would love your help to share these principles of financial well-being. Thank you!

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