Healthy spending series: Part 2 - Make a plan and stick to it

Continued from yesterday's post...

2. Make a plan and stick to it

This includes financial planning at all levels, from creating a budget for both spending and saving, always making a shopping list (hence, avoiding impulse buys), and establishing some long-term goals. Let's break it down one-by-one.

• Creating a budget will probably be your first step toward achieving your financial goals. When I was getting out of debt, I had to figure out what I needed to pay no matter what (like rent, utilities, groceries, etc), what I expected to pay for other miscellaneous things (including some fun stuff -- no one wants to live in the stone ages), and how much I'd have left over to contribute to debt. Once I realized how much I should be able to contribute, I sent that same extra $500 a month every month like clockwork, treating it the same as I treated my rent. It was only with planned discipline that I was able to eliminate $9,000 debt in less than a year.
  
  Creating a budget and getting to know it will guide your spending every day. Start with the essentials, and then with the non-essentials, and find out what's left to save. If you're not happy with the amount, adjust your non-essentials. Mint.com provides a nice interface to enter your monthly budget goals and has a reporting feature to show you if you're on pace to meet those goals.
  
  See also my post on the benefits of creating a simple budget.
  
  
• Making a shopping list before you go grocery shopping is important. Or if you're shopping for something else, make sure you know what you're out to get. If you're on a random, just-for-fun shopping trip, establish a spending cap ahead of time.
  
  Avoiding impulse buys is an important part of adhering to your spending goals -- even if you've spotted a good deal. Just because the DVD player is 50% off doesn't mean you need to buy it. After all, do you really need another DVD player around the house? If you hadn't been planning to buy a DVD player, you didn't save 50%, you wasted 50%.
  
  Of course nobody's perfect, so plan ahead and give yourself some leeway. When creating your monthly budget, budget some fluff money that you can use for whatever you want. That way, you can make a few of those irresistible impulse buys without as much guilt -- or at least with more predictability.
  
  
• Establishing long-term goals can be tricky. And I'm certainly not a licensed professional qualified to give you advice on how to save for retirement. If you feel like you need help, seek professional advice, preferably from a fee-only financial planner.
  
  Still, it's important to know the basics: The younger you start saving, the better. And the more you save when you're young, the better. If you're older and haven't started saving, you've got some catching up to do.
  
  Save for things other than retirement, like college and the purchase of a big-ticket item. If you own your car and don't plan on buying one for a few years, start making monthly 'car payments' now into a savings account so you can pay cash when it comes time to buy.
  
  Always keep an eye toward the future; understand the basics; don't invest in anything that you don't understand; know that unexpected things will come whether you like it or not.

Tomorrow on tepom.com, the Healthy Spending Series continues with Part 3: Finding leisure activities with income potential or the ability to further your career.

With a simple routine comes comfort and ease

There was a point in my life, particularly in college, where I didn't exactly trust myself. From time to time, I promised myself lots little things that I would do to better myself: reading, writing, and exercising more, eating right, etc. I'd usually stick with it for a couple of days -- a week at most -- before slipping into my old habits again. I'd always seem to find a good reason to put the book down, stop writing, sit on my butt, or drive to Hardee's. Maybe I had writer's block; maybe I had to get up early that morning and just wasn't feeling up to exercising; maybe I was starving and had nothing in the fridge. Whatever it was, I compromised, and with each compromise, the next one became easier...and easier...and easier until there was nothing left to compromise; I had given up.

When I consciously compromised my behavior, I felt a little guilty. When I had given up on the goal of the week, I was no longer compromising and therefore never really felt guilty. As a result, I spend a good couple of years without doing many of the things differently than I would today. Watching TV instead of reading; speaking my thoughts instead of writing them down; sleeping in and sitting around; eating lots of fast food. Because I hadn't set any goals for myself (or a plan to achieve them), I wasn't viewing these behaviors as destructive.

Eventually I grew up a little bit and decided it was time to make a few changes. But how would I stick with them after having trouble in the past? I was the king of excuses, and I had been excusing myself for too long. So how did I fix it?

I could always find a legitimate reason to justify a decision to not do something constructive, so I took the whole 'deciding' part out of the equation. I came up with a daily routine and a small, achievable set of rules. In the past, though I always came up with achievable goals, they never materialized because I never enabled myself to achieve them. By establishing a routine -- a daily itinerary -- I was able to achieve my simple personal goals and improve the quality of my life.

By setting a few simple rules and establishing a routine, I began writing every day, finishing books on a weekly basis, losing weight, and lowering my cholesterol. Whenever I was presented with options related to my goals, instead of making a decision on the fly, I consulted my newly established routines and guidelines. Here are some examples:

• Each morning for breakfast, I will eat a bowl of oatmeal
• I will not eat fast food
• I will go for a long walk every day (which eventually turned into a jog)
• When I have free time and am considering turning on the TV, I will pick up a book instead
• I will write every day
  

By setting these guidelines, I took the decision out of decision-making in my weakest areas. Also, I set up allowances for most items, which was a key to changing my behavior. The allowances kept me sane and flexible. But it was important for me to define them, almost as I defined items in a budget. Examples are:

• I would allow myself to not eat oatmeal if I was traveling and it was unavailable (instead eating something else that was healthy)
• I allowed myself to eat an unhealthy breakfast twice a month
• I would skip the walk if it was raining all day (but if I anticipated rain in the evening, I would try and walk earlier in the day)
• I could skip reading two days per week
• I would write every day, unless I decided ahead of time the length of my hiatus
• I still would not eat fast food
  

By being mindful of my goals and their allowances, I changed my daily routine to something that I was comfortable with. Every morning, without thinking about it, I eat a bowl of oatmeal. Because it was sometimes hard to find time to write, I would get up early and write before starting my workday. Because I know I sometimes get writers' block, I'm always jotting down ideas for tomorrow's post. During my lunch break, I take the dog for a long walk around the neighborhood. After dinner, I sit down and read, unless there is something else pressing (hey, life happens); if I'm busy for a few nights straight, I try and play catch up.

Of course, I'm not perfect. My writing hiatus for my wedding was longer than expected; I sometimes skip the walk if my to-do list gets the best of me; and just the other day I caved and watched three back-to-back episodes of The Office instead of finishing my book. And that's OK -- that's life. We're human and we sometimes need to take time for ourselves and be lazy and forget about doing something constructive. But what we can't do is forget that we define our personal goals for a reason. We define them to better ourselves and enable ourselves to live fulfilling lives. We define them because we recognize our own weaknesses and maybe want to turn them into strengths. We define them because we need to take control of the only life we can control...our own.

The ability to set and achieve personal goals is an important component of our confidence and self esteem. For me, the easiest way to better myself has been to define my goals, come up with a plan, and establish a simple routine.

What works for you?