Remember back when you were a kid and you were given an allowance? How cool I used to think, I can buy what I want with this money, anything I can afford. My kids get an allowance today, for helping around the house and such. It’s time to be serious with yourself, do you handle money like a child or like an adult? That is, do you plan and budget your spending or simply go shopping without being prepared? If you’re not budgeting and planning ahead of time, chances are you’re not controlling your spending and you’re buying unnecessary items or buying without comparison shopping. It’s really easy to do when you have a credit card and a sizable credit limit.
Maybe you haven’t started budgeting yet, if so you should seriously consider doing it. But maybe you’ve tried it, and for some reason can’t stick to a budget. It’s time to treat yourself like a child and set aside an allowance for yourself. That’s right, a cash allowance without exceptions. If you’re serious about learning money management, and getting out of debt, treating yourself like the child you’ve been acting like is the way to go. Here is an action list to get you started today:
- Cut up all credit cards (If something is truly an emergency you can call the credit card company and get a replacement card or use your credit card number.) The bottom line is, making your cards less accessible will make you less inclined to spend on them.
- Set aside your allowed spending cash money for the week when you’re paid; Set aside your allowance each week if you’re paid weekly, or for two weeks if you’re paid bi-monthly. If you’re paid monthly, set aside your monthly spending allowance in cash when you’re paid (then break it down into weekly allowances if you see fit).
- Decide your allowed spending money on the cash remaining after you’ve paid off all of your bills and set aside 10% of your income for savings. Let’s say you make $1000 per week and your bills are $800 per week. You should be saving 10% or $100 per week. So, $1000 less $800 less $100 leaves you with $100 per week spending cash.
By doing this you will learn to effectively manage your money better for a few very good reasons:
- Knowing how much cash you have for spending will force you to think about how much things cost before you buy them.
- It will also help force you to make choices between the many things you may want, instead of being able to buy at will.
- You will gain more appreciation for the things you buy with your spending money, as your spending cash will be scarce.
It’s not a bad thing to have to do this to yourself if you’ve been acting like a kid, it’s a way for you to turn your financial life around and start becoming aware of your spending. Maybe you weren’t taught effective money management as a kid and you’re simply learning it now. Either way, it makes no sense to beat yourself up now over what you’ve done in the past because you can’t control that, the only thing that you can control is what you’re going to do moving forward. Ultimately, you need to get to budgeting and a debt repayment plan, along with retirement planning and long term goal setting. After you’ve learned these baby steps, we can move on to showing you how to really take control of your financial life, it’s truly simple and mind relieving, and will certainly help you sleep better at night.