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Why You Should Start a Budget
by Kathryn Finney

Budget fashionistas know how to manage their checkbook and their closets. They know that sometimes they might need a little extra help, such as when I sought the help of a financial adviser to help me manage my financial assets. She helped me realize that the $50 U.S. Savings Bond my grandpa gave me when I was twelve didn’t constitute an established savings plan.

Thank God for financial planners like Janine Moore. This financial diva, a founder and a principal in Peak Financial Group, LLC, understands the lure of a good sale and the constraints of debt. While attending Ohio State University, she rang up over $5,000 in credit card debt shopping at JC Penney. Developing a budget helped her rein in her expenses and get rid of debt. Janine offered these five reasons fashionistas should develop a budget:

Reason #5:Buying a house is impossible if your credit is jacked.

Reason #4:Dodging creditors’ calls is no fun.

Reason #3:Saving a little now beats saving a lot later.

Reason #2:Having plastic surgery done on your credit cards is less painful than having it done on your body.

Reason #1:Having more money to spend on yourself is feasible if you don’t have any debt!

What you spend per month on clothing is, and should be, a function of your job, your geographical location, and your personal finances. The Saver’s Rule can help you figure out how much you should be spending per month on shopping.

The Saver’s Rule

Here is a little-known fact: The more you save, the more and longer you will be able to spend. Budget fashionistas must save at least as much as they spend on clothes per month. For example, if you have $250 after paying all your expenses, at least $125 of it should go into your savings account. Deposit the other $125 into a completely separate interest-bearing checking or savings account with its own debit card and checks, to be used specifically for shopping. That way you will be able to keep track of the money you spend on clothes.

Opening an interest-bearing savings account for your shopping funds is quite easy. If you have an existing relationship with a bank, ask one of the personal bankers if the bank has shopping savings accounts. These are special accounts that sometimes have slightly higher interest rates than a traditional account, allowing shoppers to save toward big purchases. If your bank doesn’t have them, just open a regular savings or checking account dedicated solely to your shopping purchases.

The easiest way to tilt the budget scale toward positive is to cut back on your expenditures. Cutting back on simple items like trips to the local Starbucks and purchasing lunch every day can save you tons of money—enough to help fund a new wardrobe.

Building Your Own Budget

Put your thinking caps on and ask yourself the following questions:

  • Do I forget to balance my checkbook and rarely review my monthly statements?
  • Do I spend more on clothes and accessories than I do on a savings plan?
  • If I lost my job today, would I be unable to pay my essential bills?
  • Do I consistently use credit cards to purchase basic items like groceries?

If you answered yes to any of these questions, then developing a budget is crucial to help you create a savings plan that is shopping friendly. Developing a relationship with an accountant can help you to manage your finances. You may also want to contact a certified financial planner (CFP). CFPs are financial professionals who have taken additional courses and passed a ten-hour examination on advanced personal finance–related topics such as life insurance, securities, and taxes. Although they charge a fee, CFPs can help fashionistas who need that extra push to make the budget cuts necessary to become a budget fashionista. To learn more about CFPs, visit the Certified Financial Planners Board of Standards, Inc. (www.cfp.net).

How to Be a Budget Fashionista
by Kathryn Finney

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