It seems tedious and time consuming to keep track of every dollar you make, but starting now is better then walking a tight financial rope. Once you have figured out how much you can safely deposit into a savings account, then your next step is to make the most out of what is being offered by financial institutions. Interest bearing savings accounts are offered with most major banks, but how would you know if there are better rates being offered elsewhere?

The easiest method is researching and comparing rates through the Internet. If you are computer savvy, jump online and check out local banks as well as www.bankrate.com. This one stop shop offers comparisons between many of the local, national, and virtual banking institutions and even includes current promotional information. Linking an existing bank account with a savings account offered by another bank can be tricky, but many of the virtual banks allow you to make deposits and withdrawals as often as you need to. You have completecontrol of your money. Virtual banking is no different then banking online with the traditional bank; both financial institutions offer all of the same benefits. When looking at banks, be sure to compare virtual banks with the standard ”brick and mortar” banks. Virtual banks do not have the costs of maintaining physical locations so they can provide their customers slightly higher returns on their investments.

As with budgeting, when you put your money into a savings account, it is a good idea to review your financial goals. What do you have planned for the next 5, 10, or 15 years? When you figure out an amount you wish to save each pay period and a specific goal to achieve, you can safely make timely deposits into and watch your money as it works for you. This can be done through a regular savings account, by purchasing a certificate of deposit or committing to a retirement fund.Before you open a bank account, take the extra time you need to get all of your information. First, make sure that you know exactly what fees they charge and how they assess them. No matter what type of account you open, you want to make sure it is free of monthly service fees and, unless you have enough saved elsewhere, that they do not require a minimum balance. If an emergency comes up that requires you to withdraw an amount that would lower the balance below what they require, being penalized will do you little good. Also be certain to review the banks history, credentials and make verify that it is FDIC insured. Lastly, pay attention to the customer service you and others have received. This will give you an idea of what type of service you can expect to receive in the future. If you are not content, take your money and business to another bank.

Once your strategy for savings is put in motion, the most important thing to do is keep yourself motivated. Dipping into a savings account is tempting and, all things considered, cheaper then using a credit card. If you decide to take out money from your savings account, be sure you set a limit on how much you are going to spend and plan for how you can put additional money into the savings account to cover the withdrawal. It is all too easy to use the money you work so hard for on items you may not need. If you notice the amount in your savings account dropping and havent set up a good plan to put the money back in, then get creative. Bake cookies, paint a picture, write a poem; these are not only great gifts for the holidays are very rewarding activities too.

DMCC is a 501 (c)3 is a charitable organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with their debt.  Education is provided free of charge to consumers as well as personal counseling to identify the best options for the repayment of any unsecured debt. To speak to a certified credit counselor, call 1-954-418-1466, email contact@dmcconline.org.

DMCC is located at 700 West Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441.

Step 1: Journalize Your Spending

Using a spending diary can help identify areas where you can reduce unnecessary expenses. Logging your spending trends, such as the daily coffee and donut, the daily newspaper, or even the soda for lunch, can be a rude awakening. The coffee and donut can cost you $1,092 a year (assuming you are spending $3 for a medium coffee and a donut…$3 x 7 days a week = $21, $21 x 52 weeks per year = $1,092).

Step 2: Estimate Your Monthly Take-home Income and Expenditures

Gather all your bills including credit card statements, receipts for groceries, gas or anything else that you buy with cash. You should also have your checkbook register available to review additional expenditures. Write down all of your expenses, broken down into categories for (1) fixed expenses like the house payment, credit card payments and car payments; (2) flexible expenses that vary each month, including the phone and electric bills; and (3) discretionary expenses, such as a gift for someone’s birthday or a scheduled outing. Add up your total monthly expenses and total monthly income. Then subtract the total expenses from the total income. The difference is available for you to use as you desire. If the total difference is a negative amount, then you are spending more than you are earning. In this case you should take immediate action to adjust your lifestyle and expenses so you do not continue to accumulate more debt.

Step 3: Plan

It is comforting and almost second nature to think that you will have more money next year. But it will not happen without some serious commitment. Before making any promises and thinking that your financial situation will change automatically, plan for change. Sit down and make some goals. Goals give you direction to realize your dreams. Establishing goals for the short, mid and long term will help you achieve financial security. Short-term goals can be met within a year, mid-term goals would probably take a little longer, perhaps five years, and long-term goals may take ten to fifteen years to achieve. Be descriptive and define the means to the end. If your goals are specific enough, you will be motivated to cut down on your spending to reach those goals. For example, you can use this tactic:

Goal(s) _____________________________

Estimated Cost _______________________

Target Date__________________________

Monthly Savings ______________________

Step 4: Reduce Your Spending

The hardest part of the budgeting process is over; now comes the commitment. Although it may seem impossible to cut your ties with some of your expenditures, you will soon become comfortable with your new spending plan. Cutting expenses is perhaps the biggest challenge people face. This can be because they are already just meeting their financial responsibilities. However, it can be accomplished. There are a few suggestions to consider:

• Pay with cash instead of writing checks or swiping your credit card. It is so easy to just write out a check or to pay with plastic. The after effects are not felt until it is too late.

• Withdraw a set amount of money every week. If you only have $50 to spend in one week, you will monitor and perhaps be a little more frugal when it comes to buying something you do not need.

• Do not create more debt. If you cannot pay for it up front, do not buy it. Should you come across something you think you cannot live without, step back and reconsider. Do you really need the extra stress of one more bill? How is making that purchase going to affect your planned goals? Even when you know you deserve something, put your wants on hold until you have the cash to pay for them up front.

• Remember your weakness. If you like to shop for clothes on a weekly basis, try to avoid going to the mall or places of temptation. If you find yourself somewhere and you want to shop, only spend the allotted amount you budgeted for.

• Rethink your shopping style. Comparison shop! Plan your purchases before you buy. Make a list of things you need before you go into the grocery store – and stay within the list.

Step 5: Pay Yourself first

The easiest way to save is to think of this category as an expense. Try not to wait until the end of the month to see if you will have money left over to put into savings. Set up a separatmoney grow. It is very important to routinely compare your budget to how much you are actually spending. Once you become comfortable with the process you will be able to alter your categories and perhaps put a little more into savings.

DMCC is a 501 (c)3 is a charitable organization committed to educating consumers on financial issues and providing personal assistance to consumers who have become overextended with their debt.  Education is provided free of charge to consumers as well as personal counseling to identify the best options for the repayment of any unsecured debt. To speak to a certified credit counselor, call 1-954-418-1466, email contact@dmcconline.org.

DMCC is located at 700 West Hillsboro Blvd., Building 1, Suite 105, Deerfield Beach, FL 33441.

Financial freedom cannot be achieved without budgeting. Budgeting involves tracking your sources of income and more importantly tracking your expenses. It is novel tool for controlling your expenses and making you aware of how you spend your money. At the outset, budgeting may seem to be onerous and boring, particularly for those of us who hate numbers. But once you realize the benefits emanating from it, you will find it an interesting exercise. Even businesses, whether small or large, use budgeting as a tool to achieve their financial goals. It is, in fact, an integral part of managing an organization.

Helps to control impulse buying.

Helps to control your expenses.

Ensures that you pay your bills on time.

Helps you to borrow money when you need it.

Helps you by not defaulting on your loan repayments, thus, protecting your credit rating.

Helps you to save money which can routed to different investment vehicles that can in turn help you build your net worth over a period of time.

The budgeting process

The first step in the budgeting process is to determine your net worth.

Your net worth = the value of all your assets less all the liabilities or loans that you owe.

The second step is to identify your sources of income and the amount from each source. Your sources of income could be salary, business income, investment income such as dividends, interest, rent. Your most recent tax return and bank account can be an excellent source for identifying your income sources.

The third step is to identify your expenditure items such as groceries, entertainment, mortgage payments, loan repayments, housing repairs, transportation, taxes.

Prepare a spreadsheet with the following columns: a) description for each item in the two sections viz. income and expenditure b) actual amount c) budget amount d) difference (between actual and budget amount) e) reason to be given if the actual amount exceeds the budget amount.

It is very important to ensure that you provide at least 10% of your gross income towards savings. A formula should be in place in your budget spreadsheet that will automatically calculate 10% of your gross earnings. The objective of budgeting will be defeated if it does not lead to targeted savings.

Budgeting should generally be done on a monthly basis. It is very important for you to enter all the amounts that you spend into the spreadsheet. This will require a disciplined approach but in the long-run, it would definitely be worth it. Keep a separate paper file for each year divided into sections based upon the items of income and expenditure for filing your bills.

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