It?s pay day once more and the self-styled one-day millionaires are again on a shopping binge. But few days after, you?d be amazed to find out at how you don?t even know where your money went.
After years of living large, many households are finally learning what financial experts have been preaching for a long time: to live within your means. The economic crunch has forced them to cut on unsustainable spending frenzy and jump on the savings bandwagon.
The most crucial first step is creating a budget within your means.
Visa, a leading payment solutions provider, has developed financial literacy programs that offer practical tips on how you can spend, save and budget responsibly.
What are your needs and wants? Learn to distinguish between the two. A want is not a need. The former is something you can do without, the latter is something that should have a place in the budget as it is a necessity.
As you make the list of your needs and wants, ask yourself the following: Why do I want it? How would things be different if I had it? What other things would change if I had it? Which things are truly important to me? Does this match my values?
It?s your money and you don?t want it down the drain, so set spending guidelines. Track, trim and target your budget. Cutting back is usually a better place to start than completely cutting out. Be realistic. It will help you to be better prepared for unexpected costs.
To trim expenses, you could use the SMART tip:
Specific: Smart goals are specific enough to suggest action. For example, save enough to visit Rome for your wedding anniversary, not just ?save money.?
Measurable: Always be in the know when you have achieved your goal or how close you are to this goal. For example, a trip to Italy costs US $2,000, and presently, you have saved US $800.
Attainable: The steps toward reaching your goal need to be reasonable and possible. For example, you know you are capable of saving a specific amount each week to purchase that trip to Italy.
Relevant. The goal needs to make sense. You don't want to work toward a goal that doesn't fit your need. For example, for the Italy trip, you will allot money for your lodging in a four-star hotel.
Time-Related. Set a definite target date. For example, the Italy trip will be in summer, and thus you should have saved enough money by that time.
Visa believes that one of the most important financial tools is not a product but knowledge. That is why Visa has been developing financial literacy programs that teach individuals how to spend, save and budget responsibly. In 2009 Visa committed to reach 20 million people worldwide with financial education by 2013.
Visa launched this year?s financial literacy program through a FIFA Financial Football game to compliment Visa?s sponsorship of the FIFA World Cup 2010. The interactive and educational game (www.visa-asia.com/financialfootball) allows players to gain financial knowledge and put their money management know-how to the test.
After all, no one will look for your money like what you do. It is not difficult to understand how to live below your means. It just takes commitment to a few good habits.