Many of us are prone to buy the latest electronics for entertainment purposes or splurge on luxurious vacations or trendy clothing but still can’t find the money for Life Insurance. In Part 1 we began to explore reasons for overspending, which can lead to having too little margin to afford Life Insurance.
Take control of your finances and demonstrate power over them, instead of letting your every whim control you. The reality of exerting that kind of power will pay dividends. Reasons #1 & #3 from this list of the top ten reasons why people overspend are connected to the idea of control.
Ironically, people feel empowered by having possessions that they purchase simply because they’re powerless to say no, either to themselves or others. Yet having self-control in areas ranging from finances to food and even displays of negative emotions is a commendable character quality.
The first step toward taking control of your finances is to determine precisely where your monthly income is going. And by precisely, I mean Every. Single. Penny. Whether you keep all receipts and tally them at the end of each day or week or log each expenditure in a notebook or on your phone as it occurs, the point is to track where your money is going by category.
If you want to create a bar graph or a pie chart, feel free, but the end result will probably be a picture that’s different from what you envisioned. Most of us make far more unnecessary purchases than we predict. In fact, to keep it interesting, you might want to make a guess at what you spend in each major category before you start tracking.
Make a Budget
There are so many ways you can do this, but the basic idea is to start with your monthly income and allot specific amounts of it to various categories, such as groceries, gas, and clothing. You can track budget categories and expenditures in a variety of ways, including these:
If you feel as if you’re relinquishing your power over the money you earn, don’t! If you find that certain categories need to be adjusted, you can always do that: Just realize that the money you add to one area has to come from someplace else. Many budget enthusiasts encourage the use of cash only, as a means to eliminate extra spending. Here’s one explanation of how using cash can help.
At the end of your first month of operating on a budget, give yourself a little something. It may be best to make your reward something not related to your finances. Maybe you can take a day off work to watch a movie or do a project.
Or perhaps you’ll go ahead and open up that Life Insurance policy you now realize you can afford and then go out for lunch or coffee, this time with money you know you actually have.
The Nicholas Insurance Agency, led by Greg Nicholas, is a family owned business serving the York county, Pennsylvania region. In the insurance business since 1981, Greg Nicholas helps families, businesses and individuals understand the value of different insurance products and make wise decisions when selecting the best insurance products for their specific situations.
Offering exclusively Allstate insurance products, the Nicholas Agency provides auto, homeowners, rental and landlord insurance as well as life & disability, recreational vehicle, motorcycle and personal liability insurance.
For more information, visit our two York, PA locations at Westgate Plaza or York Marketplace or call us at (717) 764-2024.
Image credits: Top © Golden Pixels LLC/Fotolia; 2nd © soupstock/Fotolia; 3rd © mipan/Fotolia; 4th © SUDIO 1ONE/Fotolia; 5th © Patrizia Tilly/Fotolia.