Thursday, January 26, 2012

4 Steps Toward Financial Health

I would like to welcome Marcia Richards to Motivation for Creation!  Marcia founded the Life List Club with Jess Witkins, my guest poster from last Life List Club Friday.  She has a great blog, and recommend you go check it out, and read the Life List Club Friday guest poster over there at the same time!  So, here's Marcia!

I'm so happy to be here at Lara's place on this Life List Friday! While she's over at David Walker's blog, I'm going to share with you some tips I learned a long time ago from the financial expert, Suze Orman, about how to get healthy--financially. No matter your age or experience with money, these tips can remind you how to stay on track. January is the poster-child of all things healthy, right? Let's get started!

4 Steps Toward Financial Health

How many times do we throw away leftovers without a second thought, or buy a blouse you just had to have but then it hangs in your closet complete with tags til you notice it 6 months later and give it away?
Would we cut up a dollar bill as easily? I don't think so.

When we get together with friends on the weekend, we want to make it special, but how many times do we overspend? I know I've purchased clothes just before they went on sale, because I couldn't wait. And right now I have 45 books waiting to be read on my Kindle, not to mention another 25 books on my shelf that have not been cracked open yet. Do I need this many right now? How often do you stop at the deli or pizza shop because you don't feel like cooking at home?

How about you? When have you wasted money you could have saved? We all have stories we could tell. If you're trying to get out of debt or trying to create a cushion of savings for emergencies, to buy a house, pay off college loans, or annual vacations...whatever, a change in spending habits is the path to being financially healthy.

1. Be honest: Take an honest look at where your money goes. Did you really need a $5  Mochiatta and a $3 pastry on your way to work? Lunch out with your BFF? And you picked up take-out at the neighborhood Italian cafe? You may have had a tough day and deserved all these conveniences, BUT that $35 you just spent could have been socked away.

Keep track of every dime you spend everyday for a two-week period. Then sit down with that list and check off the necessities on that list. Add up everything without a check mark to see what you could have saved.

Then consider the emotional side of your spending. Do you indulge in the pint container of Hagen Das ice cream when you're lonely or stressed? When you have treated yourself to anything new for a while, do you go splurge on new shoes? Try to find ways of satisfying those emotional moments with something that isn't going to cost you your extra cash.

2. Cut up your credit cards: I've actually seen a grown man whine at the suggestion of cutting up a credit card. "But, I neeeed it!" NO! You don't. Credit card rates are higher than ever and savings account pay next to nothing. We're losing on both ends.

Use your bank's or credit union's debit card for all your previous credit card purchases. They are accepted as widely as credit. Or use cash. Now you've stopped the bleeding, so to speak. No more skyrocketing bills with high interest and exorbitant late fees. Now you can focus on reducing your debt.

3. Make a real-life spending plan: When you create a spending plan, include everything you spend money on, even the most miniscule item. If you leave out some of the things you pay for because they seem to small to count, you could be throwing off your budget by hundreds of dollars annually.
Don't forget bigger things like the guy who does your taxes, your bi-annual insurance payment, your haircut and color every couple of months, veterinarian bills and pet grooming, your co-pays at your own doctor's office, dental visits, child care. If you pay your mortgage bi-monthly, don't forget you're not just paying twice a month but every two weeks--because of the extra portion of a week every month there are an extra four payments made over 12 months.

Add up all the smaller expenditures like tipping the paperboy, Christmas tips for your hairdresser and the postman, bringing a bottle of wine to a friend's house, magazine subscriptions, holiday cards and gifts, charcoal for the grill, batteries, oil changes for your car, the extra groceries for Christmas cookie baking, your once a week movie out or pay per view, and that scrumptious pizza delivery when you're too busy to cook.

4. Save 10% and create a stream: This is actually two tips in one. First, "pay yourself first" is an expression most people have heard. Now it's time to take it seriously, just like you've had to take getting physically fit seriously. It won't happen if you make excuses. If your net pay each week is $400, skim $40 right off the top and bank it. Don't worry about short-changing yourself to pay bills or buy groceries. if you've followed the previous tips, you will have this 10% to put away. Do it religiously. Don't cheat yourself. In just a few months, your account will swell from $0 to $1,000! You can try tricks like tossing all your loose coin in a jar and letting it fill that jar before you deposit it. Or, take a $1 bill out of your wallet everyday and put it in a box until you have $25, then bank it.

Create an additional stream of income to add to your 10%.  Years ago when my husband was putting my stepchildren through the private colleges they chose, he added a part-time job to his full-time job. Every weekend, he went to a flea market with a table and a stockpile of licensed ball caps that he had purchased at a good rate. When I needed more income, I made various craft items and found a market for them--one was a unique gift for a real estate sales woman to give to her clients when she sold them a house.

There are endless possibilities for a second stream of income such as creating websites for those who are techno-challenged, solicit speaking engagements to talk about something in your realm of expertise, teach an adult education class. Do you crochet well? Sell your creations at a craft fair. Create gift baskets to sell to people you know to use for gift giving. Is your husband a neat freak? Why not start a part-time car detailing business?

I know a woman who was hired by a homebuilder to clean the finished houses before they are turned over to the buyer.

Stop worrying and crank up that imagination!

One more thing, I worked for banks and credit unions for years in my 30's and 40's and learned that banks are in the business of catering to corporations first and individuals second. Credit unions are owned by the members. Consequently, their priority is the satisfaction of the members. The fees for services are lower and the rates of return on savings accounts are slightly higher. Just something for you to consider.

Have you ever had a time when you needed to get creative to bring home more money? What kind of struggles are you having with saving?

Marcia Richards is a veteran blogger and author of Marcia Richards’ Blog…Sexy. Smart. From The Heart. Marcia writes about SSS (strong, smart, sexy) Women, History, and the path to realizing your dreams. She has a Historical Trilogy and a collection of Short stories in progress. When she’s not writing, she can be found playing with the grandkids or her husband, traveling or turning old furniture into works of art. She believes there is always something new to learn and time to play.
Visit Marcia at:


  1. Replies
    1. So happy to have you here! I love the tips, and already use several of them. I take a savings each month, although it's not 10% and don't use credit cards, for example. My biggest help, though, is that my husband saves and we use my paycheck to buy groceries (we both contribute to bills) My biggest weakness is that extra little "stuff" here and there. To try to combat that issue, I try not to go to the store unless absolutely necessary!

  2. Oh sure, put my Crafts for Poor People Chart to shame. LOL. Actually, we're very in synch. I've been able to spend much less money and when I do, spend reasonably. I've given myself a few gold stars this week and will be depositing my savings today! I really like the 10% rule you advised. I may need to start doing that in addition to saving up what I don't spend frivolously.

    The other smart thing I've started doing is making my largest payments on the bill/card with the highest interest so get that paid off first. Then make the payment you can afford to make on the remaining bills. For example, my credit card gets paid off first. But the hospital bill does not charge interest, so I pay each month what I can toward that.

  3. What a great article, Marcia! I am giving myself a "D" in what I call "Poor Me" spending after reading this. "Poor me, I had to stay up til 11 and get up at 5 to get both writing and working out in around work. I get a Starbucks." Or "Poor me, if I go to the grocery store after work everyone else will be there because they were at work all day too, and I hate lines. So carryout sounds good." Gotta get better at that.

    But I also get a gold star I hadn't thought about until reading your article. In the last two years, I've taken 2 writing classes, subscribed to Writer's digest, entered a few writing contests with fees, and purchased several books on writing. I paid for every last one of those things for income earned through ... Writing. So without realizing it, I've created myself a second income stream (although small) to buy resources for my passion that I may not be able to afford otherwise, at least until I clean up some other bad habits : ).

  4. I've definitely been guilty of buying stuff I didn't really need. Keeping track of your purchases and insisting on a little waiting time for yourself are great ways of keeping your finances healthy.

    I disagree about the credit cards though! My husband is a mortgage lender (and a financial educator). As it turns out, credit is king when it comes to getting loans, especially a home loan. If you have 2-3 credit cards that you use wisely (maintain a low balance but not a zero balance, pay everything on time, etc) you build your credit. Making car and mortgage payments help but don't underestimate the power of having credit card accounts in tip-top condition. The trick is to use them with care and consideration not to cut them up. :D

  5. Lots of great advice, Marcia. And we can all use it. Like I told Jess the other day, I've never met the person who was so well off, she didn't have to manage her finances. There are lots of easy rules to remember, but they are hard to follow on a consistent basis. That's why it's good to keep getting reminders. Great job!

  6. Lovely post, Marcia. Hats off to you AND Suze Orman. :-)


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