Sticking to a budget can be as simple as following three basic personality traits, according to About.com’s Financial Planning site. They make it sound so easy - I know it’s not - but perhaps giving some thought to the three personality traits they describe could at least help you go further towards creating a budget and following it.

1. Have a positive attitude: This advice can apply for pretty much everything in life, but where budgeting is concerned, a positive attitude means focusing on the rewards that following a budget can bring. For example, focus on how happy being more financially secure will make you feel or the joy when you’ve completely paid off your credit card debt.
2. Remain motivated: When the will to stick to the budget starts to sag, consider giving yourself rewards for sticking to it or even increasing your goals. That is, give yourself a challenge to save an extra amount one month - sometimes setting yourself tougher goals for a short-term can motivate you by giving you a big success sooner than you’re expecting.
3. Have realistic expectations: Start with small “bite-sized” goals and short time frames - start the budgeting process step by step, rather than immediately striving for large lofty goals like “being debt free within two years”. Make your budget goals realistic and frequently reachable, then make some more.

If you’re working as a freelancer or are paid almost entirely on commissions, you’ll be one of the people who have a variable income and therefore need a slightly different approach to money management. Money Magazine recently put together some tips for those living on a flexible income which could help you out.

• Figure out the lower limit of your income and make a budget to suit. For example, look at your income over the last five years (if you’ve been paid “flexibly” for that long) and take the lowest income level. Make a monthly budget that you could survive on at this income level.
• Have a larger emergency fund than others - while fixed salary workers generally should have three to six months’ expenses as an emergency fund, the risks of earning less for a freelancer is higher and they should have enough cash saved to survive at least twelve months.
• Save for your retirement - this is often neglected by freelancers who don’t have an employer making contributions for them, so get some financial advice on the best way you can do this and make it a priority.
• When you earn money above this minimum rate, use it carefully to achieve other goals you have - for example, paying down debt like credit cards or car loans.

While most people (quite logically) wait until January 1 to make their New Year Resolutions, perhaps there’s a very good case for making your financial resolutions a bit earlier - like now!

The time between early November and the end of December is often an expensive one with the holiday season and the dangers of spending extra on your credit card - especially, for example, to buy Christmas gifts - with the good intention of paying it all off in January. But if you are wise enough to start making your new financial resolutions now, you might be able to start the year off on a much more positive note.

First of all, don’t buy expensive gifts over the holiday season just to “keep up” with other people. If your family and friends knew that you would be putting yourself into more debt to be able to give them a gift, they would rather not receive the gift - and if they don’t think this way, they don’t deserve a gift. There are also plenty of creative ways to come up with cheaper but still thoughtful gift ideas.

And secondly, don’t relax too much into the spirit of the holiday season, Thanksgiving included, by spending more because it’s a “special occasion”. You can make it more special by sticking to your budget, not using your credit card if you don’t have the cash to back it up, and remembering that come January or February, you’ll still be feeling happier compared to the distress you might feel if you spend too much now and have the bills roll in early in 2009.

photo credit: Joe Lanman

Creating and sticking to a budget is an arduous task for many people, and one that puts them off saving money or paying off debt more quickly. That’s why I like the Wall Street Journal’s recent approach to not planning a budget but instead creating a spending plan. Some of the key tips to having a workable spending plan are:

• Start by calculating your fixed monthly costs - rent or mortgage payments, household bills, cell phone plans, transport costs like fuel or bus tickets, insurance and groceries. These are things that rarely change from month to month.
• Subtract this amount from your salary or other income, and the amount you’re left with is the amount that you actually have a real “choice” about spending, and it’s here where you need a good spending plan.
• Before each new month begins, make a list of the things you would like to buy with this money. Some might be more necessary than others, for example clothes to wear to work may have a higher priority than a new video game - try to list them in this order.
• Including “savings” as the top priority for this money, and aim to make it around 10% of your income if possible; if not, start lower and review this regularly to increase it.
• Then plan which of the other items on your list you will be able to afford this month. If unexpected expenses arise, try to find the money by deleting one of these items or postponing its purchase until the following month.

Tales of people who’ve successfully dug their way out of credit card debt can be pretty useful for finding your own strategy for saving money and reducing debts. Zen Habits blogger Leo Babuta summarized his six steps for avoiding credit problems and while many of them are stuff we’ve heard before, there were a few new slants:

• The need to cut spending is clear, but look at lots of different areas in your life where you could do this. Not just the expensive coffees, but also think about things like clothing and furniture which might be non-essential
• Leo talks a lot about scaling back your lifestyle, which basically means avoiding a materialist and consumerist approach. For example, trade in a fuel-guzzling car for a smaller one, don’t upgrade your cell phone or TV or other gadgets just because something slightly better is available, and he even suggests moving to a smaller home where you’ll have less space and therefore need less belongings.
• Use cash. This might involve paying by credit card (if you’re buying online or if your credit card offers some useful reward system) but only buy something when you have the cash to back it up. You can nearly always wait for what you want until you have actually saved up the cash.

photo credit: Joel Bedford

photo credit: JLStricklin

The economic slump has hit us all, and singles may feel the pinch more than others. It’s common for serious couples, married folks and families to stay in and watch a movie with microwave popcorn, but singles are supposed to tear up the town, frequent upscale bars and take their dates to on expensive outings. Now though, singles are looking for creative, inexpensive date ideas, hoping to stretch their dollars farther.

If you’re in this boat, not to worry; there are plenty of options. If you live in the city, museums are a cultured and inexpensive way to spend the afternoon, allowing you to save your bucks for a nicer dinner than you might otherwise have. And don’t overlook the fun of a casual date at a local bar or restaurant/bar - it may not have “classy” written all over it, but plenty of men and women would have just as much fun throwing darts and shelling peanuts as they would downing expensive wine at a stuffy restaurant. In fact, forget the formal dinner date and branch out into other formats - afternoon hikes, visits to the park or inexpensive cultural events. After all, the key to a good date is not how much you spend, but how much fun you have.

We all love the idea of stretching our dollar, but sometimes the steps we have to take can be daunting: biking to work? Only possible on casual Friday! Eat more at home? I already do that, and don’t want to feel guilty when I do go out. What most of us need are tips on almost effortless ways to trim the monthly budget, whether by a dollar or ten.

• Reuse food containers & ziploc bags: Lots of food already comes in great, reusable containers: margarine, ice cream, cream cheese, even milk. Instead of tossing your containers (or even once-used zip-up freezer bags), wash them out and run them through the dishwasher for sanitization. They’re a free, environmentally-friendly way to use something you already have.
• Double your dinner: This technique will work for any dinner meal, but is particularly suited to bulk meals, like soup and spaghetti. Make extra — preferably double — what you think your family will eat, and then send everyone off to work or school the next day with leftovers. This will almost always be more cost effective than pricey sandwich meats, and it super convenient.
• Utilized under-used kitchen appliances: Believe it or not, all those appliances you got from your wedding registry are very handy: they save electricity! Your stove uses lots of energy (think of how big it is to heat up), so try cooking in your crockpot, rice cooker, or electric skillet.
• Make your own cleaner: You might be surprised at how efficient a bit of vinegar and baking soda can be!
• Hang your clothes out to dry: Okay, this obviously cannot work year-round, but if you wash on a sunny day, consider hanging your clothes out to dry in the sun - it’ll help you save energy, and your clothes will smell wonderful.

Okay, so you want to save gas, but can’t afford (or don’t want) a hybrid or electric car. If you live an urban or suburban area, you might have another solution at your fingertips: commute via scooter. Scooters are the gas gods of the transportation world - averaging 60-80 miles per gallon, they give you a huge bang for your buck. In fact, some scooters only cost $5 to fill up, and that’s taking into consideration today’s gas prices!

If you choose to scooter up, you must take safety precautions. First and foremost, buy a helmet. Get familiar with your scooter and with your neighborhood drivers. Keep in mind that you’ll be much harder to see on a scooter, so practice (very) defensive driving at all times. Try to travel on roads with slower speed limits, as well - this way, you won’t put yourself in the normal frenzy of high-speed commuters.

Also remember that you may need a special license to drive your scooter, so check with your state DMV for more details. Finally, get insurance — which can be as inexpensive as $100/year — to protect yourself and other drivers. Always be responsible and safe on the road.

photo credit: Jeff Keen

Paying off credit card debt, buying a house or investing in the sharemarket are all well and good but the very first step to financial security is to save money - and the best way to save money is by having a budget and sticking to it. A recent how-to guide has some good reminders about the basics of planning a budget and starting to save money, using these main steps: (more…)

Many retail foods, from breakfast cereal to juice jugs, are growing smaller by the day, as companies fight to maintain profits without losing customers. With the rise in raw ingredient and fuel prices, though, something’s got to give, and most retailers have decided that a product’s cost to consumers won’t be that something. Therefore, retail products will see a small rise in price and small reduction in size, maximizing profits while keeping consumers in the relative dark. (more…)