Need help realizing your financial goals?
A penny here, a hundred dollars there, the more you spend, the less you can save. All of us want a secure retirement or the best college education for our children, but not everyone succeeds in reaching their goals. Creating a successful financial plan begins with setting goals and then saving enough on a regular bases so that the money can grow over time.Most people hate the idea of having to “budget.” So don’t think of it as budgeting, think of it as finding some extra cash that will help you reach your financial goals. It may be tedious at first, but in time it becomes second nature and when your kids are ready for college, or you’re ready to retire, you’ll be very glad you gave up a latte or two. To understand your cash flow, begin by keeping a record of expenses. There are certain fixed expenses, such as mortgage payments, electric bills, or commuting costs that you can’t avoid. Then there are the variable expenses- clothing, travel, entertainment, etc, where you may be able to save. Go through your checkbook and credit card receipts and make a list of your expenditures. Try to record out-of-pocket expenses for a week. You might be surprised to learn how much of your paycheck is going to things you don’t really need including the daily latte, the newest CD, gifts etc. If you can save an extra $50 to $100 a month, you could be well on your way to meeting your financial goals.Fixed and Variable ExpensesTo help identify your expenses, it helps to break them into fixed and variable expenses. Fixed expenses normally include rent/mortgage payments, utilities, taxes, education, childcare, loan payments, insurance premiums, transportation and savings. Variable expenses may include groceries and eating out, clothing, gifts and other miscellaneous expenses.Saving MoreFirst, look at your fixed expenses. How much of your income goes to savings each month? Consider any contributions to your retirement plan, plus any regular savings programs you participate in. The best advice for savings is “pay yourself first.” Consider your savings a fixed expense and every month put a portion of your paycheck into savings. A better idea might be having the bank deduct the savings automatically. If you don’t see it, you’re not as likely to miss it. Some financial experts suggest that you earmark at least 5% of your total gross monthly income for savings, if you can afford it.Then look at your variable expenses. Where can you save? Do you eat out in restaurants often? Could you save money by bringing your lunch to work? Do you give gifts that are more expensive than you can afford? Remember, every penny you save today can mean more when you really need it. Isn’t it worth it to give up buying something you don’t really need in order to meet your financial goals?Try to be balanced in your efforts to save more. If you set spending limits that are impossible to meet, you’ll get frustrated and give up your savings plan. Start with small items that are easy to do without. Once you’ve achieved success in one area, you can try to find other areas where you can save a dollar or two without feeling much pain.Jeffrey Apps & Tracy Tutag offer securities and investment advisory services through AXA Advisors, LLC (member NASD, SIPC) 1290 Avenue of the Americas, New York, NY 212-314-4600 and offers annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. They can be reached locally at 970.926.0601 or email@example.comAXA Advisors, LLC does not provide legal or tax advice. Please consult your tax or legal advisor regarding your individual situation.