Skip to main content
I came across some interesting statistics today while reading Journal of Financial Planning:
  • America ranks as number 1 among 42 countries for highest percentage (22%) of citizens who have no money left after paying essential bills and spending discretionary dollars (ACNielsen)
  • 28% of Americans with no money left to save at the end of the month in a similar ACNielsen survey six months before (ACNielsen)
  • 9 out of 10 affluent families will lose their fortune by the end of the third generation (Chrisitian Science Monitor)

In my own business I've noticed an increase in the number of clients who hire me to help them figure out why they are still living paycheck to paycheck. In the 1990's, most of my clients wanted to learn how to invest. Today they want to learn how to make their money go further.

I don't pretend to know the reason for this shift or the scary statistics above. I have a guess to offer - overuse of credit to finance daily existence. Financial Planners recommend that payments on your consumer debt (credit cards, car loans and unsecured loans) not exceed 20% of your net monthly income. How does your financial situation look in regards to this standard?
If you're overextended (i.e., payments total more than 20% of your net monthly income), there are a few things you can do to get back on track.

  • Cut back on spending - divert the savings to your debt payments; dine at home and/or pack a lunch for work to enjoy instant savings
  • Stop using your credit cards and debit card for purchases - if the money isn't in your bank account to write the check or you don't have cash on hand, don't make the purchase
  • Curtail impulse buying by only shopping with a list - whether going to the grocery store or the mall, have a list of specific items you need and only buy those items
  • Forego this year's vacation trip - use the money saved to pay down the balance on your highest interest credit card/loan

These are just a few ways to improve your financial health. Take a look at your spending over the last three months (your check register is a good place to start). Identify the "luxury" items or events you bought that you could forego in the near term until your financial situation shapes up. Where will you cut back in your spending this month?
- Catie Fitzgerald

Comments

Popular posts from this blog

Career Shift Budgeting (Part 1): Finding Your Next Career

Are you dissatisfied with your career and want to make a change?  Did you recently lose your job due to a layoff and want to pursue a new career? The first step to making such a shift is to identify potential careers to pursue. There are many resources available to assist you with this process, including working with a career development professional.  For you do-it-yourself types, here are a few of my favorite resources for finding a fulfilling career: Do What You Are: Discover the Perfect Career for You Through the Secrets of Personality Type What Color Is Your Parachute? 2011: A Practical Manual for Job-Hunters and Career-Changers   Occupational Outlook Handbook (online version) I Could Do Anything if I Only Knew What It Was: How to Discover What You Really Want and How to Get It   Career Briefs Once you've narrowed in on a few potential careers, you will want to explore the following:  Nature of the...

Get Organized to Save Money

How "Being Organized" can save you money... Taking a small amount of time up front to get organized can save you time and money.  Here are a few simply steps you can take today to keep more money in your pocket. Set up autopilot for your bills -  Take advantage of your bank's online bill pay service to automatically send payments for your monthly recurring charges.  Set it and forget it!  Taking a few minutes to set up auto bill pay will pay off by preventing late charges and finance charges due to missed payments. Take inventory - You can avoid buying duplicate items when you know what you and have and where it is located.  Take a quick inventory  your pantry, the medicine cabinet, laundry room, and your office before shopping (online or brick-and-mortar). Stock up on consumables - You will always need shampoo, toothpaste, laundry soap, etc. so buy these items that get used up in bulk when on sale.  Of course, don't go overboard...

Saving Money on Your Food Bill

According to an article from PLoS One ,  food waste in the USA has progressively increased from about 30% of the available food supply in 1974 to almost 40% in recent years.  For a family of 2 with 1 income, this translates into a throwing out $3,266 worth of food (source: Bureau of Labor Statistics: Consumer Expenditure Survey 2008). To minimize the amount of food I throw out, I conduct a quarterly eat-down.  What is an eat-down? It is when you focus on creating meals using only what you have on hand (fridge, freezer and pantry).  Rather than stop at the grocery store once a week, I'll simply go "shopping" in my own kitchen, using up items before they spoil and saving money in the long run.   It’s actually fun trying to come up with creative recipes.  Anyone have a good recipe that calls for cream of celery soup and jar of cocktail onions? If you decide to implement an eat-down at your house, I’d like to hear your strategies and results.  Sim...