Holiday spending excesses lead many people to resolve to handle money differently in the coming year. All too often, budgeting resolutions fall by the wayside before Ground Hog's Day. When curbing excess spending sounds like a painful exercise in self-denial, is it any wonder so many people fail to keep budgeting resolutions? <br />
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If you are like most Georgians, chances are you never learned about money management in school. Most people admit to being graduates of the sink or swim school of money management. Many come very close to drowning before they ever learn to swim.<br />
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Focus on what you have to give up, and you'll likely fail. Instead, focus on the prize--the benefit you get from having money for important goals such as paying for a college education, getting out of debt, buying a first home and saving for retirement. Here are a few tips to help you manage your money better in the coming year.<br />
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Know where your money goes. Find out how much money comes in and exactly what you do with it. Carry a pad with you for a month or two. Record every purchase. At the end of the month, divide your spending into no more than a dozen categories. <br />
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Target eyebrow-raising surprises for spending cuts. Once you know where your money goes, it is often obvious where to cut back. Pay particular attention to the little things you do every day as the cost can really add up. <br />
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Set realistic and specific goals. A specific goal includes the cost of the goal and the date you plan to reach it, such as planning to save $600 by next December for holiday gifts. The goal is realistic if you can afford to set $50 aside each month. If you cannot, adjust the goal or increase your income. <br />
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Develop a plan for spending to meet goals. Besides goals, your spending plan will need to include fixed, variable and occasional expenses. Fixed expenses are the same every month. Variable expenses go up or down each month. Occasional expenses are due less often than every month. Some, like birthdays and annual insurance premiums, you know about. Others, like medical bills, arise unexpectedly. <br />
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Pay yourself first. Saving whatever is left over usually means not saving at all. Instead, put the money you need to save for goals and occasional expenses in your savings account before you do anything else. Better yet, arrange for an automatic deposit or payroll deduction into your savings account. When you get raises at work, sign up for half the raise amount to go into a savings account or a company savings plan.<br />
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Eliminate debt. Pay attention to how much you pay in monthly finance charges on credit card debt. Instead of paying interest each month, you could be earning it on your savings. It is much better to be on the lending side of that transaction than on the borrowing side. If you did not have to make debt payments each month, you could put that money in savings.<br />
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Focus on one thing at a time. When making changes, it is easy to go too far, too fast. Commit to making one or two changes at a time. Stick with them until the change becomes second nature. Then you are ready to start on a new change you would like to make.<br />
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These simple suggestions can help you do better with the money you have. Some changes pay off more rapidly than others. The sooner you start, the more you stand to gain. <br />
Source: University of Georgia Cooperative Extension
