I find that personal finance and money is no different to any other area of my life. Planning and goal setting are essential in enabling me to reach the outcomes I aspire to.
With the arrival of the new year, now is a good to revisit some of your goals and maybe set a few new ones. In this post I thought I would outline some of my personal finance goals for 2009.
Diversify My Income Streams
Like most people, my main source of income is from my day job. I have a modest portfolio of investments, mainly in the stock market, which produces some income as well. But this investment income is not yet enough to cover our family's expenses. I would like to reduce my reliance on full-time employment by growing my investment portfolio and perhaps diversifying into other areas.
Starting a small business is in the back of my mind as well. But ideally the set-up cost would need to be low and it would need be something I could run on a part-time basis initially. This is really nothing more than an idea for now.
Cutting Our Living Expenses
Last year I made some headway on this front, but I haven't been as diligent as I could have been. I've been going through our household budget and looking at how we can save money on the big-ticket items. It's surprising how much money you can save if you're willing to shop around for the best deal. Negotiating also helps.
Tidy Up My Investment Portfolio
The stock market investments I hold have held up reasonably well through the recent financial turmoil. As you would expect the prices have fallen from their highs but by and large they are in pretty good shape financially. However, I tend to be a collector of stocks and as a consequence the number of securities I hold tends to become a little unwieldy. I need to trim down the number of holdings to a more manageable number.
I firmly believe that a personal or household budget is one of the fundamental building blocks when it comes to the subject of personal finance. A budget allows you to see clearly where your money comes from and where it goes. This is the very first step you need to take if you want to get in control of your finances.
Having said that, I've been a somewhat sporadic user of a budget as a personal finance tool. What I tend to do is prepare a budget and satisfy myself that my income does indeed exceed my planned expenditure by a sufficient margin to meet my savings goals.
What invariably happens then is that once I'm comfortable that my spending habits are roughly in line with the budget, I tend to neglect it until another (normally financial) event triggers me to go back and re-visit it. And that's what happened recently.
My wife has recently quit her job so it means we're down to one income. While it means a more relaxed family life for us all, it also requires a little more attention to the financial details of our lives. So in keeping with tradition, this event has prompted me to go back and update our budget.
The good news is that we still have an adequate difference between income and expenses to allow us to meet our savings goals. But the lower level of income caused me to cast a slightly more critical eye down the list of expenses to see where we could potentially save a little extra money.
Starting with some of the larger annual outlays, I fairly quickly identified 2 or 3 items which deserved closer attention. Adding together our phone and internet bills made it one of our larger regular expenditures. A little research quickly identified a number of better deals available to us for these services. In the end we chose a VOIP option in combination with our internet service. The cost is now roughly half what it used to be.
I plan on tackling some of the other larger expenses in the near future. I'm sure we could get a better deal on some of our other services if we shop around a little.
What prompted this cost cutting exercise was the preparation of a budget. It forced me to have a look at all of our expenditure in one place rather than in dribs and drabs as they actually occur. And we're seeing the benefits already.
With rising oil prices many of us are feeling the pinch at the pump. And for most of us the cost of running a car is taking up more of that monthly personal finance budget - no doubt eating into our discretionary spending. And discretionary spending is where the fun is after all. So in this post I'm going to share 7 tips to help you cut the cost of running your car.
1. Drive Less
Sounds obvious doesn't it? The less you drive, the less fuel you'll use and the more money you'll save. But how can we achieve this? We don't want to be stuck at home all of the time. The first thing you might consider is cutting out the short trips. I bet many of us could walk to the shops to pick up a few things. By not taking the car we can save money and get exercise at the same time. And if you do need to drive, consider combining trips. Run all of your errands on the one trip instead of making many trips.
2. Car Pool
And speaking of driving less, have you ever considered car pooling? This is not always practical depending on where you live and what your working hours are, but why not give it a try. If you pool with just one other person you'll cut your work travel costs in half. Get more people involved and you'll save even more money.
3. Drive More Smoothly
When you do need to drive, consider your driving habits. Do you accelerate smoothly and evenly applying gentle pressure to the accelerator? Do you move smoothly with the flow of the traffic? Or do you change back and forth between lanes - speeding up to squeeze into a gap then having to brake and slow down once you're there? Try driving more smoothly and you'll use less fuel and save money. My grandfather used to say you should try to drive as though there were an egg between the sole of your foot and the gas pedal.
4. Lighten The Load
How much junk to you cart around in the car with you? Have checked what's in the trunk? You'll be surprised how much stuff you can do without and how much fuel you'll save. So go through your car and make sure you're only carrying what's necessary.
5. Keep Your Tires Fully Inflated
Another great way to use more fuel is to drive around on under inflated tires. I'm a cyclist as well as a motorist and I can tell you it takes much more effort to pedal when there's not enough air in my tires. It's the same with your car. More air in the tires means less rolling resistance and more cash in your pocket at the end of each month.
6. Regular Servicing
A well tuned engine will use less gas as well. Make sure your car is maintained properly. Get it serviced regularly by a good mechanic to make sure the engine is running smoothly. And a well tuned engine not only uses less fuel but produces less pollution as well.
7. Buy A Smaller Car
Now this isn't something we can all do straight away. But next time you're due to upgrade your vehicle, consider a smaller model. It may go against the grain, but I suspect higher oil prices are here to stay. So If you buy a car with a smaller engine you could be laughing all the way to the bank. And if you're willing to invest a little more up front you might even consider a hybrid or something similar - again it's good for the environment.
Bonus Tip - Public Transport
7 tips sounded better than eight, so I've made this one a bonus tip. Public transport - do you use it? I know it's not practical for everybody, but it's well worth consideration. Depending on the quality and efficiency of you local transit system, you may be pleasantly surprised. And if you have to commute any sort of distance it can be a great way to catch up on your reading.
So there we have it. A whole bunch of ways to improve the way you travel. Not only will you be helping the environment in most cases, but you'll be saving money of your fuel bill as well.