As we began the new year, my wife and I reflected on our past few years since we began our financial overhaul in 2009. Before then, we did not handle our finances well, and we often wondered how we could ever make things better. Even extra income from online adjunct teaching did not help because we kept spending the extra income rather than saving it. Since we took financial classes in 2009, we control our finances much better – even after losing much of that extra income. We take in less, but we manage it much better. In 2012, we resolve to strengthen those financial strategies even more.
Save even more
My wife and I saved $5200 throughout 2011 simply by making weekly transfers of $100 from our checking account into our savings. By setting up these automatic transfers, we never have to think about it. We include the transfers in our bi-weekly budget so we do not spend that money unnecessarily. By saving this money, we covered high expenses that occurred in 2011’s final two months: medical costs, car repairs, and heater repairs.
When 2012 began, I changed the automatic weekly transfer to $125. This additional $25 per week will net an increase of $1250 extra savings by the year’s end. This savings will help with any emergency costs that arise or home improvement projects that we need to complete throughout the year.
Spend more wisely
We began this process in 2011 – after we unadvisedly made one large purchase in December of 2010 that we now wish we did not make. Rather than paying off the balance of my student loan, we spent approximately the same amount to upgrade our vacation club. That was our last unnecessary large purchase! We do not fully regret the purchase as we still greatly enjoy our vacation club and love the extra package, but financially, we should have either paid off the loan or saved the money.
We did not make that type of mistake at all in 2011, and in 2012, we resolve to continue our disciplined spending. We will make sure to save for things we want, and before buying, we will strongly compare need with desire. If we can do without a desire, we will postpone the purchase. Emergencies keep occurring, and we need to rebuild our emergency fund after using much of it on those medical and repair costs. Needs come before desires.
Follow budget closely
Regarding our daily cash flow, we will follow our two-week budget plans even more strictly. We give ourselves a minimum threshold on each account and do not allow ourselves to fall below it. Once we schedule our bills, weekly savings, and leisure allowance, we will continue to monitor our cash flow even more closely. Often in 2011, we fell below our minimum thinking that we will make it up next time. Occasionally, though, next time had more bills, which made the budget even tighter. I prefer acting too cautiously and looking like a cheapskate to spending unnecessarily and running out of cash too soon.
Earn more if/when necessary
I no longer teach those online college classes, but I do work other online freelance opportunities. The flexibility of freelance allows me to set my own earnings and schedule. If the situation arises in which we must have more income, I can work more online. I can also become an online tutor to earn still more. I will never rely on others to take care of my family or myself. I will search for opportunities to earn that income for myself.
My wife and I have greatly improved our financial management and status by beginning these types of practices. In 2012, we resolve to work harder at each one to make sure that we maintain our comfortable lifestyle. As teachers, we make modest incomes. However, since we learned to budget and discipline ourselves, we make those modest salaries work out well. We make mistakes, but we learn from them. Together, we will make it financially.
More from this contributor:
First Person: How Communication Put an End to Our Money Arguments
First Person: Making Sure We Have Enough for ‘Rainy Days’
First Person: Why We Maintain an ‘Intermediate Fund’