Posted: 11:13 a.m. Wednesday, May 15, 2013
Sometimes there must be a sense of urgency to accomplish a goal. For example, my parents, sisters, nieces and other family members have banded together to lose weight during the next 30 days. Whether it’s my niece posting an exercise tip or one of my sisters sending me some weight loss advice, we’ve challenged each other to work together for the next few weeks. It’s fun and the competition to lose the most weight motivates all of us to reach our goals.
When it comes to money, people need to use this same approach. Finding a friend or family member who needs to save money, pay off debt or start an investment account is the best way to implement and stick to a financial goal, especially if you’ve been procrastinating or don’t understand how to begin.
There are several ways that this approach can work. Once you find a group of friends or family members to your 30-Day Money Challenge, here’s how to begin:
First, reward the person who spends the least amount in 30 days. Many people spend money on an impulse, either on food, at the craft store, a yard sale or department store. Others buy gifts online because they are inexpensive or on sale. But you don’t need to purchase an item because it’s on sale or cheap; affordability is based on your income.
By tracking your spending for 30 days, everyone keeps a record of all of their expenses. This approach not only helps limit expenses; it provides a comprehensive view of a person’s total spending. Keeping a record of all expenses will not only limit your purchases on discretionary items, such as dining out, entertainment and clothing. It will help you explore ways to reduce spending on monthly costs, such as utilities and insurance. For example, shop around for car or homeowner’s insurance; you may find that you can reduce these costs by several hundred dollars annually.
Next, set a savings goal for the 30-day period. Decide on a set amount that each of you will save during the next 30 days. There’s nothing wrong with starting small. For example, each person can save $1 a day. If you find after one week that this is too easy, increase it to $2 a day. At the end of the month, increase the amount to $5 a day for the next month.
Decide on a reward that will motivate the group. Whether the goal is reducing expenses or saving a set amount, decide before the contest starts on the reward for the winner. It can be dinner, a gift card or tickets to a ball game or movie.
In the end, everybody wins. Once the 30-Day Challenge ends, take the money saved by your frugal behavior and deposit it into a savings or investment account, pay down debt or buy something special. This will be a reward in itself — and motivate you to keep expenses in line and saving money for critical needs.