By Robert H. Flashman, Ph.D., State Extension
Specialist in Family Resource Management; and Ilana Pinsky, Graduate Student,
Family Sciences, University of Kentucky
Even after
the New Year has begun, you might still want to consider resolutions and begin
keeping them now. So what if you haven’t kept the resolutions you made a few
weeks ago? Any time is a good time to begin anew.
Improving
your money habits can be a great resolution, and it is simpler than you think!
Here are three great ways to get started developing better money habits in 2016:
Set Short-Term Goals.
Your first
step is to set short-term goals. If you’re young, forget intermediate and
long-term goals for now. Establishing helpful habits is much easier if you can
have early and regular successes. Begin by keeping all goals very short-term
and doable so you will begin to feel successful soon. When making diet and
exercise resolutions, most people give up in less than three months unless they
see success early. This might mean saying, “I’m going to lose three pounds in
January,” rather than “I’m going to lose 35 pounds in 2016.” (If you lose three
pounds each month, you will lose 36 pounds this year; but keeping goals to the
short-term enables you to have successes early and regularly.) This type of
goal-keeping works as well with finances as it does with health goals.
Cut Unnecessary Spending
(especially on items you buy daily and weekly).
This is
the place to begin, with the mystery cash you can’t often account for. Students
establish spending habits in high school and carry them over into life on their
own.
Many teens
receive an allowance or have a part-time job. They may be able to do what they
want with most of the money they earn, without having to think how they spend
it; so they develop poor money habits. If you don’t track your daily expenses,
you will have no idea how much you overspend in a year. Common unnecessary
expenses include buying snacks and drinks every day, eating out daily instead
of packing lunch, and splurging while shopping. Instead of buying coffee every
day, start brewing your coffee from home; this will save you a lot of money
over the course of a year. If you enjoy coffee from shops and cafes, then try
buying it once a week as a treat.
Here is a
formula to help you figure out how much you are spending on coffee: Price of
coffee X number of days each week that you attend class or go to work = Weekly
Cost of Coffee. Multiply that weekly cost X the number of weeks you attend
class or go to work = Total Yearly Cost of Coffee. Let’s say you get a coffee
from Starbucks, and it costs $4.50. Assuming you do this all the time: If you
go work five days a week, and work 50 weeks a year, then you are spending $1125
on coffee per year! You could buy a great new computer or make a down payment
on a vehicle with that money, especially if you save for four years.
If you do
not have time to make coffee in the morning and you really need to buy it each
day, there are less expensive places such as McDonald’s. A medium-sized coffee
is around $1.39 there, so if you bought their coffee every day instead of
Starbucks, you would be spending $347.50 per year. What a difference!
Even if
you aren’t a coffee drinker, you can probably find less expensive alternatives
for everyday purchases. The same can go for eating out every day; there may be
less expensive places for you to eat, and you can do even better by packing
your own lunch. You can use vending machines to buy drinks and snacks, or you
can bring a water bottle and snack with you.
To be a
savvy shopper, use magazines like Consumer
Reports to compare products, then phone apps that help you find the best
price. Many stores, particularly food stores, provide coupons online, so be
sure to take advantage of those. Make a shopping list before going to the
grocery, and eat before you leave so you are not tempted to spend more on food
than you plan on.
Coupons Are Your Friend.
Many
consumers overlook coupons, which you can find online or have delivered to your
mailbox (both snail mail and e-mail). They are easy to find. If you receive
coupons, look through them and clip out ones offering discounts on food and
products that you buy anyway. (There’s no sense getting a bargain on something
you don’t need.) For every coupon you use, the savings will add up; you might
be surprised at how much you can save. For more information on couponing, read
the Kentucky Cooperative Extension publication, “Couponing 101”: http://www2.ca.uky.edu/hes/fcs/factshts/FRM-AP-087.pdf.
For more
money saving tips, contact your local county Cooperative Extension office.
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