Expert Q&A

To get a fresh financial start, break bad, old money habits


If you’re sick and tired of falling behind on bills, start by thoroughly tracking your spending and trimming where you can

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Dear Credit Wise,
I bring home $1,900 a month but I always feel like I am behind because I don’t spend wisely and I don’t save at all … What are some budgeting tips for people like me … my bills are $1,540 a month … no excuses … TIRED & READY TO CHANGE — S.B.


Dear S.B.,
Not budgeting. Not saving. Not spending wisely. You’ve identified three bad habits you need to break.

You say you are tired and ready to change, so what you need is a plan that will make budgeting, saving and spending wisely your new habits.

When it comes to budgeting, you’ve got the basics down. You know how much you bring in each month ($1,900) and you know how much your bills are each month ($1,540). Simple math tells us that you have $360 left over after paying your bills.

Some bills, such as rent and car payments, are probably not something you can change in the short term. But you may be paying too much for cable, Internet and phone services. Take a look at those bills and see if there are extras you can cut out. You might also look at your utility bills, especially electricity. If you pay much more in the summer than in the winter (or vice versa), you might consider going on an equal-pay plan, where you will pay the same amount each month. This makes it easier to budget those bills. Review your insurance costs; you may be able to save money by increasing your deductible. Also look for other “leaks” in your budget, as they can add up fast.

Next, you need to figure out where that $360 is going. The best way to do that is to track your spending. There are many online tools for tracking spending, but you can start with a simple notebook and pen.

The key to successfully making this work is to write down every single purchase you make. This is not just how much you spend at the grocery store on your weekly trips and how much you spend to put gas in your car every time you fill up. It also means every time you stop for coffee on your way to work, every lottery ticket you buy, every candy bar you buy from a vending machine, etc. Write it all down and account for every penny you spend. If you do this faithfully for a month or two, you will know exactly where your leftover money is going. You already know that you are not spending wisely and this exercise will help you identify those areas that need to be cut back or eliminated altogether.

Finally, let’s talk about saving. Hopefully after doing the above, you will have found some areas to trim in your budget and spending. I would suggest you start out small; even $25 a month will add up if you can put it away faithfully and leave it alone. A savings account that is not tied to your checking account is helpful for this purpose, because it makes it a little harder to access immediately. Treat whatever amount you decide on as a bill and add it to your list of monthly obligations. The key to successful savings is to pay yourself first.

Review your budget and spending monthly and work toward increasing your savings amount when you can. Conventional wisdom says it takes 21 days to establish a habit, but when it comes to money issues it probably takes several months.

Don’t give up and by this time next year, you should be able to say that you have developed that new habit and are budgeting, spending wisely and saving.

Be wise with your credit! See related: How to change financial bad habits in 8 steps, Making a budget? Break down Big 4 expenses first, Your first budget in 3 easy steps


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