Establishing Goals, Budgets, and Good Financial Habits

Not knowing what your financial goals are is almost like setting out on a long car trip for parts unknown without a road map. If you drive long enough, you'll definitely end up somewhere - but probably not where you were hoping to go. All destinations are not Created equal whether you're talking about current vacation plans or your long-term life goals.

After you establish your financial goals and your family's financial goals, you need to set a budget. I know I know - budgeting sounds like a pain but living within a budget doesn't have to be the equivalent of a financial straightjacket.

Once you've put a budget in place and have your goals in mind work to control your spending by adopting good frugal spending habits.

Keep your check register balanced and up to date. That way, you know exactly how much money is left in the bank at all times. Occasionally we get too busy to subtract checks from the balance as we write them out, and before too long we could find our accounts have no funds in them. Seeing a running total keeps you from thinking you have more to spend than you do.

Keep a written record of all the money you spend throughout the day, no matter how insignificant it seems at the time (Coffee, newspaper, sodas, cigarettes, gum, and so on). The process of writing each purchase down helps you see clearly where the money's dripping out of your life. If you find your money's going out to incidentals and impulse purchases writing them down can actually help you say no to overspending.

Don't pull out your credit card for every purchase. Better yet leave your credit cards debit cards and checkbooks at home unless you're traveling. Avoid carrying a lot of cash unless you need it. The more cash we have on hand, the more tempted we are to spend it.

By changing one habit at a time, you can turn your entire financial picture around in a relatively short timeframe. But remember, new all habits take a while to become ingrained - about a month, if you listen to the experts. Many people don't realize this and make developing new habits more difficult than it needs to be by not allowing themselves enough time or by trying to change too many habits at once. Try to work on only one new habit a month. In a year's time, you can establish twelve new habits with relatively little stress and strain.