First Quarter Financial Plan: Maximizing Your Budget

posted 2/10/2014 in General

“Treat success as a platform to go higher, not an easy chair to rest in.”
This quote is not only applicable to business, but also to the topics Lincoln Savings Bank is covering this month as part of our First Quarter Financial Plan. If you’ve been following these posts, then you probably have a pretty good budget in place by now. However, there may be a few things you can do to help it be even better without sacrificing much in the way you live.
Prioritize- the three largest costs in your budget besides paying down debt are most likely housing, food and transportation. How do you split up the rest of your budget? What are your priorities? By prioritizing everything, you prioritize nothing, so choose wisely.
Ask, “Do I really need this?”- do this with everything you purchase, from a $1 can of black beans at the grocery store to $50 pair of jeans. Speaking of which…
Wait a week on purchases over $50- this will help you to decide if you really need these things or not. Plus, something might come up in that week that will make you glad you didn’t spend the money.
Use a spending diary- the concept is simple: write down everything you spend money on and how it made you feel. Was the $20 you spent eating out really worth it? By identifying your emotions about spending money you can identify some areas of spending you can cut.
Use a Personal Financial Management (PFM) tool- a PFM tool takes the spending diary to the next level.  It allows you to categorize and even forecast spending, giving you opportunity to identify where there’s opportunity to cut back.  LSB’s Budget Plus PFM is available for FREE within online banking.
Reward yourself- there’s a reason most diets don’t work: they force you to eliminate everything that tastes good to you. It’s the same with budgets; you often cut so much that you relapse to bad spending in a bigger way than if you were to reward yourself once in a while. Reward yourself every so often with something small: if you’re trying to avoid spending too much on coffee, grab your $4 caramel macchiato once every two weeks.
A good product can always be made better, and so can your budget. Maximizing its effectiveness leads to better gains for your financial goals and more self confidence in your financial abilities. Stay tuned to the Lincoln Savings Bank blog for more financial wisdom next week!
Lincoln Savings Bank, member FDIC
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