Now’s A Good Time To Go On A Financial Diet

You spent months counting calories and ramping up your exercise, and now your swimsuit fits your body just right. Can you say the same about your financial waistline?

If you find yourself feeling a little bloated financially, maybe it’s time to go on a monetary diet for the summer (or even longer), to help you save some money. Fortunately, a lot of the tactics used for a physical diet can be applied to tighten your fiscal midriff.

  • Count up your “calories” first. Get a handle on how much you spend in a week or month. This will involve itemizing your spending and keeping receipts, then tallying up the numbers after a week’s or month’s time. Place the receipts and bills in a file that you can refer back to when needed. And if you use paperless billing, create a separate email folder for those bills or purchase a personal finance software program to assist you.
  • Set a goal of how many “calories” you want to lose on a weekly or monthly basis. Once you know where all your money’s going, you can decide what to cut out. You’ll likely find some frivolous or unnecessary expenses (daily purchase of a specialty cup of coffee, for example) that you can easily lose. And you may be surprised to discover other areas where you can “trim the fat.” The key here is to be realistic with your goal. Just like it’s unrealistic to expect to lose 10 pounds each week, it’s probably far-fetched to expect to save $100 per week.
  • Create a budget. This allows you to see the big picture. Knowing where all your money is going is a critical part of establishing a budget. And by having a budget, you can prioritize your spending and specifically determine what’s essential (mortgage and utility bills) and what’s discretionary (new pair of high-priced dress shoes).
  • Don’t be discouraged if you slip up here and there; that’s human nature. You’re going to experience financial temptation that’s equivalent to ice cream and cookies along the way. The key is to accept those slipups and not lose sight of what you’re trying to accomplish.
  • Just like fad diets that help you lose weight quickly but ultimately fail over the long haul, quickie financial diets won’t have a lasting impact on long-term financial health. Your ultimate goal should be sustainable progress over the course of years, not weeks or months.

 

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