The Fru-Gal: Start 2015 with a financial plan, and stick to it

Deborah Morris, The Fru-Gal
Deborah Morris, The Fru-Gal

The New Year is here. Forget everything that you didn't do last year and think about what 2015 is going to bring you financially. You cannot reach your goals without a master plan. According to Manisha Thakor, CEO of MoneyZen Wealth Management, healthy finances should look like this: 50 percent of your after-tax income covers needs, such as rent or mortgage, health care, car payments, and commuting costs; 30 percent goes toward the things you want, from eating out to premium cable; 10 percent goes to retirement savings and 10 percent goes to eliminating debt.

Now sit down and find the numbers from your income to match this formula. Use these figures to start off your 2015 budget. I have always found that having the numbers written down month by month helps me eliminate any overspending by making me aware of exactly where my money is going.

All your numbers must include that late afternoon latte or the checkout counter impulse buy. These add it all up, and if you see the numbers for these expenses written down you might feel less likely next time to splurge. I find that many people start off the New Year with wonderful intentions, but when they don't see a substantial change in their savings or credit-card debt, they give up. Paying just the minimum on a credit card with high interest rates can mean by the time you pay off that card, you paid twice what you originally bought the item for. Think about that the next time you find yourself buying that item on sale. Having a healthy financial plan is not torture; the process only gets you closer to your goals and having better quality of life.

Don't forget you can reward yourself with that $5 latte when you are following your monthly budget. You've earned it.

Here are some tips to get you started:

■ Have an emergency fund. With your savings plan, remember that unforeseen problems do arise, and you have to be ready to take care of them. It might be a car repair, vet bill or home maintenance repair, but be ready so you don't find yourself going back into debt. These setbacks do not happen every week, so your savings will increase with your plan.

■ Start the year challenging all your expenses. Go through each line item one by one. Are you paying for a monthly gym membership that you are not using? Even if it's just $9.99 a month, that adds ups. Call your insurance agent for any discounts on your bill, or if you should adjust your deductible because the value of your car has decreased. Remember all they can say is no, but take into account that no one is calling you to pay less. Check out the AARP safe driving class that is offered for drivers 50 and older. Your insurance company might give you a discount when you have completed the class. Call Bell House for a schedule and fees at (859) 233-0986.

■ Really think about what makes you happy. Is it going out to dinner with your friends once a week? If so, do it, but look at other places in your budget you can cut. We as a society have an "I want this" attitude. Let's change it to "Do I need this?" or "Can I afford this?" If you don't have the money, do not buy it.

■ Simple preventive maintenance can save you money. According to, a joint website of the U.S. Department of Energy and the Environmental Protection Agency, underinflated tires can reduce gas mileage by 0.3 percent for every 1 psi drop in all four tires. Using a gas price of $3 per gallon, the fuel efficiency from proper tire inflation could save the average driver $432 annually.

■ Take some simple steps within your home to save money. Open curtains on your south-facing windows during the day to allow sunlight to naturally heat your home, and then at night, close the curtains to reduce the chill you might feel from cold windows. Take a candle to each window in your house to see if there are any drafts by watching for movement in the flame on the candle. If so, use some window sealing plastic to seal the window. Make sure it is tight to reduce any cold air coming in. Also, check caulk on the window for air leaks. When you leave the house, make sure all lights are off and turn down the thermostat.

■ Set realistic goals. When we start off, we tend to create sizable goals. Then in February, if we don't see enough progress to keep our motivation level high, we quit. Instead, break your goals into smaller ones, so you can have a feeling of accomplishment in reaching each benchmark.