Go Green! Mind Your Money

So often when we talk about going green we are talking about the environment or a conservation project. But I believe that going green should start a lot closer to home. In fact, I believe it should start in your own purse or wallet by minding your money.

In good times, minding your money may seem almost optional because there is plenty to go around, but when things get tough(and many of us are feeling the pain right now), it’s time to really focus in on your green. So how do you do that without allowing it to take over your life? Here are three strategies to get you started:

1. Run your household like a business. One thing that most profitable businesses do is they develop a budget. They project the amount of money coming in, expenses they will need to pay, and then they save or invest the rest for the future. They manage their money, not the other way around. As a slight twist on this process, I recommend that households reverse the steps and use the 20/80 Rule instead. The 20/80 Rule says that you should take 20% of your income and allocate a percentage of it to savings, charity, and investments, and then use the remaining 80% for your household expenses. Why save and invest first? Because it is very difficult for most families to save after they pay their expenses (expenses have a way of expanding to and sometimes exceeding the amount of money you have available) which means that many people would never get to the saving or investing part. But if you use the 20/80 Rule, it’s already done.

2. Set goals for your savings and investments. Idle money has a way of slipping through your fingers so give it a purpose. And make the purpose something that will motivate you to continue to grow it versus spending it on non-essentials. One of the best ways to organize your goals and your investments is though the use of a financial plan. If you don’t have one or you haven’t updated yours in the past year, it’s time to get started crafting a new plan that will help you understand what it will take to achieve your goals and if you are on the right track with your investments. Talk with your financial advisor, find a template on line, or complete the exercises in the Minding Your Money book available at mindingyourmoney.net and develop a plan that is based on your goals.

3. Grow your money management skills. Money doesn’t come with instructions and many of us never received any formal training so educating yourself is key to your success. Things are always changing and it’s important to understand how changes impact your money and ultimately your future. Spend some time each day reading something about money – even if it’s just the headlines of the business section of the paper. Watch money programs. Read magazine articles. Talk about money with your spouse and your kids. Attend classes or seminars. And, if you haven’t already done so, start investing. It doesn’t take a lot to get started and now is the perfect time. Remember, the more you know, the easier it will be for you to mind your money.