Today's post comes from Jess Davis and CPA and founder of the website Beat The CPA. In this article she shares tried and tested old fashioned tip that women can use to improve their finances! Enjoy!
One of the biggest things that can hold people back is debt. Climbing out from under the rock of financial overextension may seem impossible, but if you’re smart and have some self-discipline, it’s certainly possible.
Staying afloat is especially difficult in this economy, so let’s take a look at five ways to manage your finances in a more responsible manner. As we all know, thanks to increased media attention on the issue, women are unfortunately paid less than men, so balanced budgets are increasingly important for young female professionals.
So, as women, how exactly can you improve your personal finances without limiting your spending power or social life? It’s not easy, but there are some old-fashioned methods that will certainly apply to modern women who need to save a few bucks on each paycheck.
Write It Down
The old-fashioned approach to things isn’t always the most attractive option, but sometimes there’s a reason that a certain task has been done a specific way for so long. Okay, so you don’t have to actually use a pen and paper for this one, but the idea remains the same.
As someone who deals directly with the financial industry and helps CFAs and CPAs, I encounter numerous people each day who rely on pen and paper to keep track of finances. Sure, they eventually input these transactions into Excel or another application, but the initial tracking is done manually.
Try writing down each purchase you make, either on paper or in a spreadsheet on your computer. Budget out your bigger fiscal responsibilities—rent, mortgage payments, monthly bills, etc.—and determine how much money you have each month for extra expenditures based on your paycheck.
Once you begin to see how much money you spend, you can get an idea of exactly where you may cut some costs and rein in your spending. Be sure to write out every purchase for a month, so you can have a view of your longer-term spending habits. As you write things down, you’ll see yourself become more cognizant of your daily spending.
Set It Aside
Once you’ve done so, think about how much you want to save. Set that amount aside IMMEDIATELY when you get your paycheck. If you deposit that money into a savings account on the first of every month, it’s like you never had it in the first place. At first, this may be extremely difficult to do, however, it will become easier once you mentally accept that it’s not part of your spending coiffer.
You will notice that your spending habits will adjust to your disposable income. Think about it: if you get a raise, you adjust to that new amount. Think of your depositing money into your savings account as a slight adjustment to your pay. Trust me, you won’t even think about what you’re doing by the fourth or fifth paycheck.
Live Within Your Means
Now, this may be the most difficult adjustment. If you’re someone who lives the high life, but can’t really afford it, this is going to be a tough transition. There’s nothing sexy about packing your own lunch and eating it, but that’s just what you’re going to have to do.
I come from the older school world of finance—there’s no sugarcoating things and it’s just a blunt dose of reality. You are probably spending too much money. Let that sink in for a second. It’s not a weakness or a flaw, you’re just a product of your time. People overextend themselves these days and find that they are in fact quite over-leveraged.
It’s not a fun realization to come to, but that’s life. So, try and adjust your lifestyle. If you were going out to dinner two nights a week, scale that back to one. If you like going out for drinks on Friday and Saturday night, try to make it just one night. If you’re in a relationship, explain to your partner what you are trying to do. If they aren’t okay with you scaling back your lifestyle, it probably wasn’t meant to be in the first place!
We all need help in making financial adjustments. Look to friends and family for help, but try and live by my three-pronged approach to cutting your debt and spending. Keep a tally, set money aside, and live within your means. Sometimes, this simply means saying no, a skill that can be truly empower any individual, over time. In no time, you’ll be flush and will have capital to invest!
Jess Davis lives in San Diego and has helped hundreds of students pass the CPA Exam with study tips and strategies on her review website Beat The CPA. Jess Davis is a dominant force in the CPA world, as she’s a veteran test prep guru who is always on the lookout for the latest and greatest exam tips and tricks. Understanding the perils and pitfalls associated with the CPA, Jess wants to make the preparation journey as easy as possible for future test takers. Outside of the accounting world, she likes camping, climbing, and being outdoors away from the world of numbers.
**This blog post contains sponsored content**