Take Control of Your Finances in 7 Kaizen Steps

by Aileen

Street Sign _Personal FinancesIt’s already begun; I’m hearing the panic about Christmas expenses and holiday travel from lots of people, and it’s not even Halloween yet!  I get it though, I really do.

Taking control of our financial life is something that some choose to take control over, while others chose to be “bad at.”

I don’t mean to sound insensitive, but if we don’t choose to manage our financial life then crisis will happen, and not just around the expensive holiday season, but each time we have an unplanned financial moment come up.

Don’t worry, I’m not going to lecture about WHY we need to be empowered and in control of our finances; I’m just going to offer some simple tips that may help reduce the stress and prevent these financial crises from appearing on an annual or regular basis.

7 Kaizen Tips to Empower Your Financial Life:

1. Write it down – Record your expenses either in a notebook, on your phone, in an excel spreadsheet or mint.com etc…  It’s just a habit, and you CAN create a habit. You can do it for 90 days or one year. I recommend one year, because it will really help you see what you spend your money on and how often you spend without thinking. It will help you become financially conscious, and it will help you create a realistic budget. One of the reasons people can’t find a budget that works is that they don’t know the little things they spend, the quarterly expenses, and the annual memberships etc… things that are not in their typical monthly budget. By recording every expense you’ll learn to put things like the following into your budget:

  • Car Wash
  • Oil Change
  • Doctor Visit Co-pays
  • Triple A (Auto) Membership
  • Haircuts

2. Multiple Saving Accounts – Create a few accounts with your bank. If you are the person who spends whatever amount they have in their account, then create a barrier for yourself.  You won’t be as likely to spend the dollars that you set aside for the airline ticket you need at Christmas, and you’ll have the money to buy that ticket. (Also try to book your flight in August or September) ****At least have an emergency fund. If you don’t have one, start building it!

3. Create a Budget – you can use an excel spreadsheet or use mint.com Know in advance that you will revise your budget a handful of times to get it to where it actually works. Maybe you only want to spend $40 a week on gas, but if realistically after you keep track of everything you spend, you discover that you spend $60 a week on gas you’ll need to revise your budget. I’ll never forget the year I realized I spent over $2,400 at Starbucks.  I was shocked, angry and mortified… But I stopped going there every day after that. Prior to that moment it was “hard” to not go every day, but after I saw how much I spent in a year and what I could do with that money, it became a lot easier to not go every day.

When you track every dollar you spend, you’ll realize that the reason your budget didn’t work was, you had holes or areas where you spend cash without knowing it. Spending about $7 each day, is nearly $50 a week, and $200 a month which is why you may be short every month, and why your budget isn’t working.

4. Spend Less than You Earn –  If you’ve cut out every expense and you still don’t make enough to live on every month, then you need to find additional income/revenue. If you are someone who doesn’t bring in enough money every month to pay their bills, and I know that’s a lot of people right now. Do your best to find ways of bringing in additional income.  With the little time you have after working your job and driving your commute, muster up the energy to:

  • Find things in your home you can sell on eBay or garage sale.
  • Find a skill you have that people will pay you for (babysitting, cleaning houses, graphic design, web design) Ask a couple friends to help you decide what people would pay you to do as a freelancer.
  • Enter the part-time job competition, it’s pretty competitive with lots of people looking for work, but it’s still an option.
Or find another way to increase your income so you can spend less than you earn.

If you are someone who spends as much money as they have, extra income may not be your solution. Too often people are living paycheck to paycheck with a six figure salary, because as they increase their income, they increase their spending. The way to nip this thing in the bud is to grow your plan, strengthen your discipline and feel empowered about your choices.

5.  Chose Gratitude – Choose gratitude and activate the law of attraction. The best way to be open to abundance is by being grateful for what you do have. With each bill that you pay, smile, bless it, and feel joy that you have enough abundance to be able to pay this bill. Pay the bill with joy and love. See your ability to pay the bill as you having abundance.  With every item or service you decide to cut out so you’ll no longer have that bill, don’t feel bad. Rather feel a deep sense of gratitude that you’ve found a way to let go of a monthly obligation, and now you have more abundance to put into other areas. It’s okay if you haven’t updated your wardrobe in so long you can’t remember, feel grateful for the abundance you do have.  Convince Yourself to get excited about saving. You can do this by having a frugal partner who shares your successes with (read the Zero Dollar Day Post for a fun game strategy). Use affirmations, “I’m choosing to empower my financial self and my financial life and I’m winning”

6. Enjoy a Financial Diet – Just the way it feels great to put healthy nutritious foods in our body, it can feel great to say, “I don’t need to buy anything other than necessities this month. I feel free, I’m not being an over consumer and it’s a choice. I have the ability to buy things I don’t need, but I’m enjoying this detox, this diet.” This month only buy the absolute necessities. **And pay off those credit cards, ASAP! Those nasty interest rates will just devour you if you carry a balance.

7. Plan – put a plan together for how you will invest and save now that you have some extra money. Go  beyond frugality, beyond saving and start investing and growing  your financial life and well-being! Rather than saving for a car, what about saving to grow your financial life? There’s a sense of inner peace when we know we have savings nest that we don’t plan on spending.

 Here are a few personal fiance  websites for you:

Mint.com’s Mint Life

Get Rick Slowly 

The Simple Dollar

I Will Teach You to Be Rich

Even with small continuous steps, anyone can regain control of their financial life. It’s a choice.

What tips or suggestions would you share for improving ones financial life?

What’s worked well for you in the past?

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{ 16 comments… read them below or add one }

Lance October 10, 2011

Aileen,
So, so interesting that I’m reading this on your site today. My daughter has had a bad toothache all weekend, and we had her into our dentist today. Well…that toothache was an infected tooth (and big expense to go along with it). Luckily, though, we have really concentrated on being wise about how we spend our money. Today – that means that – while this expense (and the pain) are not fun – they are easily manageable.

And – as for credit cards – we use them heavily, although we never have carried a balance. And we keep what we owe to other people limited to our home mortgage – and hope to have that paid off within a very short few years.

so…this is great to read. It’s such important information to get out there. With a little bit of planning, you can set yourself up for financial success…
Lance´s last [type] ..How to Embrace Change in the Face of Great Pain

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Aileen October 10, 2011

Oh those random expenses that pop up! Dentists, auto …. the ones that need immediate attention, those can just plain knock us into mayhem if we’re not ready. I use credit cards to, since they’re such a great tracking tool – and I love the idea of earning points, but I agree with you that the only way to use them is to not carry a balance. I may not yet be near financial freedom, but grateful to not be near financial ruin :)

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Vishnu October 10, 2011

Thanks for the tips Aileen. I love mint.com. All your tips are practical and helpful except one.

Item number 4 is simply outrageous!?! :)

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Aileen October 10, 2011

Hi Fabulous Vishnu. I visited your site a moment ago – looks like you’ll be posting soon :)

# 4 is outrageous? I was thinking # 5 might be considered a little out-there, but # 4 is pretty essential. I do appreciate your thoughts and feedback!!

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Vishnu October 11, 2011

teasing you of course. It’s the most important important rule:) you might enjoy this book: http://www.youtube.com/watch?v=VL3KuaFvOSc

I was going to launch now but postponing til April. I’m just a blog junkie and reader for the moment.
Vishnu´s last [type] ..Hello world!

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Aileen October 11, 2011

LOL fun short video

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Tess The Bold Life October 11, 2011

Aileen,
Reading Lance’s comment reminds me how difficult it was when our girls were young. There are so many expenses its crazy. I remember when all four were in sports…uniforms, athletic shoes, money for snacks for away games…that alone used to stress us out.

I think it’s more important than ever to have a six months emergency fund. Leo Babauta has really impacted me with his simplicity. It took me a while to stop the Starbucks addiction. I like to have it at the airport and a couple of times a month. That’s it. And we complain about the price of gas!
Tess The Bold Life´s last [type] ..How to Give Yourself a Second Chance

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Lance October 11, 2011

Tess,
And reading your comment…reminds me of all those regular little (and not so little!) expenses that add up with kids (like all the sports equipment, fees, school fees, field trips, etc, etc, etc). I let my wife handle those regular kid expenses…and I don’t even know how she keeps track of it all!!!
Lance´s last [type] ..How to Embrace Change in the Face of Great Pain

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Aileen October 11, 2011

I can only imagine how the expenses increase exponentially with four children!! There are so many expenses that pop up and appear and they can create an intense amount stress. I’ve managed to turn frugality into an enjoyable experience because I needed to find a way to like saving – which wasn’t initially fun at all; it felt like total deprivation. Leo & the other minimalists have been a great source of inspiration for my desire to cut-back and simplify. I’m still not yet a minimalist, but getting closer :)

lol – I know most of complain about the the cost of gas and not the cost of … Starbucks :) I’ve gotten myself down to the celebrational Saturday Starbucks – so once a week. Maybe I’ll get it down lower one day soon.

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Jimmy October 14, 2011

Sorry, hope I am not interjecting needlessly. I can’t help but saying my piece.

Tess, the situation you recalled is what I am going through now. My young family seems to be consuming every single bit of income. From education, food, medical, insurance, enrichment. I guess these are facts of life with children. I do not dispute this need or feel regret investing on my children.

My point is should we invest in our children at all cost? To the extend where we have to be stretching ourselves beyond our means. That is what is happening to our family now and the financial stress can be unbearable. To not do brings guilt because we would not have provided an average life for them. That is the dilemma we have.
Jimmy´s last [type] ..10 Enemies of Good Time Management

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Aileen October 17, 2011

Hi Jimmy,

Some things are easier in theory than in practice. My personal belief is that when one takes care of one’s self, one is better able to take care of others. With family, it’s taking care of the whole family including family finances, which sometimes means all family members, at times, go without in order for the well being of the family. I’ve seen parents spend outside of their mean and resent their children later. I’ve seen children grow up feeling consumed with guilt in their adult hood because they feel their parents spent all their money on them, with nothing left for themselves.

Financial budgeting is hard for the majority of people and it’s even harder for families when parents have to say no to their kids. So , ” My point is should we invest in our children at all cost? To the extend where we have to be stretching ourselves beyond our means.” I say no. What happens when the parents can’t retire? What happens if there is no savings and parents lose their jobs? I have known homeless families, and it hurts when I think about it. By making financial decisions to protect the overall well being of family, sometimes we have to say no to kids more than we want to, but we can see the bigger picture and they can’t. It’s our responsibility to take care of our family finances and find ways to live within our means, or increase our income without sacrificing too much time that the children never see their parents. It’s not an easy puzzle to solve, but financial peace needs to be present.

Do you listen to Dave Ramsey? Or Read his books? – He gives sound practical advice for individuals and families.

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Joe Wilner October 11, 2011

Aileen,

Thanks for sharing this timely post! I always procrastinate during the holiday season and end up overwhelmed with financial obligations. I’m glad you mentioned Mint.com, I use this and it’s an amazing tool! Something that I try to apply as well is to live below my means. A simple way to budget is just to live a more basic lifestyle and finding ways to enjoy yourself that doesn’t cost an arm and a leg. Every bit can help during the holiday!

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Aileen October 14, 2011

“A simple way to budget is just to live a more basic lifestyle and finding ways to enjoy yourself that doesn’t cost an arm and a leg” Joe, that’s an awesome argument for those who say they don’t want a budget for many reasons – it’s “too hard” to create one. to stick with one, or it makes them feel limited etc… I’ve heard countless reasons why people don’t want a budget and won’t stick to one and you have a Great reason!

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John Sherry October 13, 2011

It’s phenomenal how simple this is Aileen, yet so life changing, and still beyond many people. Most have no financial stratgey or any management bar dealing with it month by month, pay check to pay check, so this post is of enormous value because I know it works as I’ve had to tackle most of these in the past. I would add one more to the mix which used to cause me a few money headaches – don’t spend it till you’ve got it and that includes a loan (an advance payment loaded with extra interest) or other I-can-afford-it products. Make this behaviour a no-no and stick to only what you have and only when its yours. Keep it in your pocket or your bank!
John Sherry´s last [type] ..Winning At Sports Through Unsociable Practice

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Aileen October 14, 2011

“don’t spend it till you’ve got it and that includes a loan (an advance payment loaded with extra interest) or other I-can-afford-it products. ” YES! Too often people feel a payment is coming to them and they spend it before it arrives, and sometimes it doesn’t arrive or it’s not as much.

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Rebecca January 25, 2012

Awesome post!!!!

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