Budgeting can be difficult. But with the right tools and resolve, it can become easier once a routine is established.
Michelle Conner has never made a new year’s resolution, but 2011 has changed her opinion.
“It is to bring more money in and put a lot away,” the 24-year-old MTSU student exclaimed long before the clock struck midnight marking the start of a new decade.
“This is a new one for me,” she said. “Usually I just buy whatever I want whenever I want. But when you get down to your last dollar, and all of a sudden you’re stressing out, it’s like you have to stop your lifestyle to live a whole new lifestyle for the time that you are strapped for cash.”
Conner isn’t alone – the New Year typically brings about a slew of resolutions aiming to get a handle on finances.
One way to become financially savvy is to create a budget, according to Jeff Brown, certified financial planner with Financial Services and Solutions in Murfreesboro.
“The old tried and true thing is to start using a budget, and one of the ways that works very well is if you put your check book on Quicken or Microsoft Money,” Brown said.
“You can’t manage something you haven’t measured. If you do actually come up with a budget, you can usually find some money that you could cut out that you just don’t realize you’re spending.”
Brown said he also advises clients to take control of their investments.
“So many times I hear people say, ‘Well, I get those investment statements in the mail, but I just throw them in a drawer,’” he said. “If it’s bad news, you can do something about it.”
Brown added that organizing paperwork into files is equally important. Oftentimes clients will bring their boxes of papers into the office to be sorted.
“We’ll show what to keep or what to throw away, and it helps them tremendously,” Brown continued. “With regards to tax time, it’s better to start preparing early. If you’re going to owe money, at least you’re going to know sooner (to prepare).”
As a rule of thumb, it’s best to save 10 percent of income, but Brown explains that individuals can start at 2 percent or 3 percent and build from there.
“Save as much as you can; you can’t save so much that you’re can’t make your rent or house or car payments,” he said. “But the first thing you ought to have is an emergency fund. Stick three to 12 months of living expenses in an account where you can get to it, like a money market account.”
Each person’s financial situation is different, and each one requires different management.
As for Connor, she has made up her mind to stick to her financial resolution.
“I think I’m going to stick to it,” she said. “I want part of it to go towards a vehicle and the other part to go towards paying off a few debts. Hopefully from that point, I will be saving from then on.”