Most people who know me, know my background is in finance and accounting. Yes, I spent a considerable amount of my career-to-date in investment banking; and yes, I am a proud CFA charterholder.
What most people don’t know is that even with my background, I often neglect my personal finances from time to time. For me, sometimes mental wins trump mathematical wins when it comes to my finances.
We have all heard the traditional ways to budget:
- Don’t spend money you don’t have (use cash)
- Housing should be less than 30% of your budget
- Create a grocery list and plan meals
- Reduce restaurant visits
Oddly enough, the following 3 non-traditional budgeting tips offer readers a 2-for-1 special today! Read these tips for your budget, but digest them further to apply them towards your health too!
Strategy #1: Start Small
Basic finance will tell you that when you have several credit cards, a mortgage and a car loan, you should start paying down whichever piece of debt has the highest interest rate. (The logic here is simply because you’re paying off the most expensive piece of debt or obligation that you have.) Makes sense, right?
Not to me! To me, I need to feel a sense of accomplishment to keep me motivated. It’s like getting in shape. If I workout hard for a while and don’t see any results in the mirror or on the scale, it’s hard to keep pushing. For this reason, I fully subscribe to the Dave Ramsey theory of the debt snowball.
This is why in both instances, it’s best to start small. Focus on the smallest piece of debt or one single habit that you can change to improve your waste, no waist.
The debt snowball plan says to pay the minimums on all amounts of debt and prioritize your smallest amount first. If you have $1,000 on your credit card, $30,000 on your mortgage and $10,000 on your car – pay the minimum amount on each of them and a little extra on the credit card. Soon, your credit card will be paid off and you’ll be down to 2 loans. Feels good, doesn’t it?
What do others say about the snowball method? Read more here.
Strategy #2: Quit Late-Night Binging
Not only am I’m talking about your diet and splurge cravings, but I’m also talking about your online shopping habits. The internet is a beautiful tool we have which allows us to be in dozens of stores at the same time, each with their convenient carts, their timed sales and their perfectly placed ads to keep us shopping.
Ever wonder why you wake up to 15 promotional e-mails in your inbox? It’s because smart retailers are preying on late-night shopping habits, which are proven to be more reckless than day-time. Many online retailers cite having the highest amount of sales volume between 10 p.m. and midnight.
Don’t believe me, yet? Here are some of the hilarious items marketed at night by your favorite retailers.
Strategy #3: Trust Your Guilty Gut
Have you ever purchased something, enjoyed the high of nonsensical-spending only to be ridden with guilt later? Worse-yet, ever gone completely overboard at dinner, derailing your workout plans and hard work you’ve done that day? We all have probably been on this emotional rollercoaster of fun a few times. For budgeting, that guilty feeling in your gut is your wallet saying, “We can’t really afford this.” I’ve found the more often I listen to it, the better I feel.
Now let’s be clear here, sometimes I still grab the cute notebook with matching oversized paperclip and tote it around in my cart, or even purchase it. It’s the next step that’s important; when the feeling sinks in, I put the item back on the shelf or return it. If you try this a time or two, you’re likely to experience that same kind of high you used to get when you spend beyond your means. This time however, the blissful feeling is because you’ve regained control of your finances and have ‘earned money’ back in your pocket! How’s that for some finance psychology?
So, physical WAISTLINE or budget WASTE-LINE, use these 3 tips to improve both!