I really love the idea of money.

Does that sound weird? It does sort of, doesn’t it?

I’m not Alex P. Keaton-obsessed with cash or investments. Not by a long shot.

Frankly, I could care less if I ever held another $10 bill in my hand again.

Except that we need money to live. (Yes, the idea of living off the land in western Colorado is appealing. But not realistic. It’s just not).

So what I really mean is I love the idea of not having to worry about how to pay for things. I wish we lived in a world where people all contributed to society and we were all taken care of. We all had a house to live in, clothes to wear, food to eat, records to listen to, running shoes to run in, books to read. You get what I’m saying. (Notice I didn’t even bring up health care or higher education).

Anyway, we don’t live in that world. And earning money so we can spend money in capitalist America is what we (are forced to) do.

(I’m not doing it very well, at the moment!).

After a short hiatus, Nicole McDonald is back with tips on how to save money. Thank God.

Nicole McDonald, momsavesmoney.net

I’ve worked with many people in various financial situations through my work as a financial counselor (a collateral duty during my years in the Navy) and anyone can make their personal finances work with a solid plan. Having a plan for your money will pay off big in the long run, no matter where you are now.

1. Track your spending – An essential element of any budget is determining how much money is really being spent. Many people have an idea how much they spend each month, but tracking every penny can really be eye-opening. I recommend tracking spending for at least two weeks to a month and including everyone in the household for this to be effective. It may be shocking to see how much money really is spent on Starbucks coffee, online shopping or lunches at work.
2. Create a budget – This is where you make categories and write down how much you spend each month on each item. I like to have two columns: one for fixed bills such as rent, electricity, car repair, medical bills, insurance and car loans; the second for variable bills such as entertainment (including cable), groceries, gifts, clothes, shoes, eating out, etc. The fixed bills have to get paid regardless and the variable bills can be tweaked and reduced as needed.
3. Analyze the budget – How much money are you spending each month? Are there places you can cut costs? Do you really need 200-plus cable channels? Can you stretch your haircuts an extra week or even cut your hair yourself? Do you need a mani/pedi every month? Do you eat out frequently? Can you spend less at the grocery store using coupons or buying less prepared foods? Tip: Having several frozen dinners will pay off if it means you don’t go out to eat. Really look at the money you are spending and determine what stays and what goes. Some things you might not want to sacrifice and that’s OK, as long as you make it work in your budget. If you really want a Starbucks coffee or a meal out to treat yourself every week, go for it — as long as it fits your financial goals.
4. Create a Revised Budget – This is the budget after you’ve analyzed your expenses and determined where you can cut costs. Don’t forget about car repairs (generally $100 per year of the car’s life – a 5-year-old car should be $500 in maintenance annually, for example), health costs, gifts, etc. The revised budget will be your financial goals and how much you intend to spend each month in each category. To follow this, you can set up a cash envelope system or track spending on Excel. My preferred method of tracking is an Excel sheet that I print each month and leave on the fridge for my husband and I to add our spending. When the money from each category, like groceries or entertainment is gone, the key is to stop spending until the next month. Remember, if you find you need more money than originally allotted, tweak the budget. A good budget should work for you, not against you.
5. Develop a Money Saving Mindset – To really make a budget work, you have to mentally be prepared. Write down your financial goals and why following a budget is important to your future and your family. I find that having a specific goal, like paying off $3,000 in credit card debt, opening a business, adding $5,000 to an IRA, saving for a big purchase or just living within your means, can be a very powerful motivator. Write these goals on Post-It notes and place them where you will see them every day, like the fridge, calendar or bathroom mirror. Remind yourself daily about why following a budget and curtailing spending is so important to you. Over time, following a budget will become automatic and the cuts won’t really seem that drastic. You will learn that you really can live better while spending less.

Obviously, this is a basic overview of budgeting, but it can be powerful. There are many great books about budgeting, finance and many resources online. I am not a financial expert by any means but just provided the basics to get you started on meeting your financial goals. Seek out the additional information you need and get started on finding your financial freedom. It takes dedication, but it will feel so good when you pay off that debt or build a nest egg for your family. The bottom line is: Just Do It!

Nicole McDonald writes about freebies, coupons, deals and product reviews and hosts giveaways at www.momsavesmoney.net.