Have you ever found yourself wondering where all the money
has gone and its not the end of the month? There are things we can do to help ourselves
eliminate being in this situation. Listed below are the steps you may follow,
along with a brief discussion of each:
1. Determine monthly
take-home income.
2. Understand all
bills and expenses
3. Tracking expenses
4. Building up
savings and retirement
5. Spend less then
you make.
Determine Monthly
Take-Home Income
Whether you are a single individual or a family, you need to
determine how much money is being made each month. Once this is determined the family
or individual knows how much money there is to work with. If we find ourselves
spending more than we make, then some decisions need to be made.
There are basically three options: get another job to
subsidize your income, get more education or training to get a better paying
job, or decrease your spending. Each option should be considered carefully by
the individual or family.
Understand Bills
and Expenses
Account for your bills and the money you spend during your
daily activities. This can be done by saving copies of your paid bills and
recording your daily expenses in a small notebook. Once or twice a month take
inventory of your expenses. Daily expenses would include all money paid out of
pocket except your monthly bills.
Tracking Your
Expenses
We have created a budget using the computer to track our
finances. A good spreadsheet or financial software will help track your
expenditures. We create categories in our budget that allow us to micro-manage
our expenditures.
A brief example will help in better demonstrating this
point. We have categories like food, insurance, auto, fuel, clothing, savings,
children’s expenses, etc. You can come up with whatever categories fit your
needs.
After you have determined what your monthly take-home income
is, you need to divide it up between your categories. The total amount placed
in all the categories needs to equal your take-home income. The key to making
the tracking effective is to enter your expenses regularly and stay within the
amount allotted in each category.
If your track your expenses effectively, in just a few
months’ time you will find areas where you might be able to make changes and
save money. We have noticed how much money we spend on frivolous stuff.
Following a budget and tracking expenses takes inner commitment to be
effective.
Savings Account
and Retirement
A big part of any budget should be setting aside money into
a savings account. Money in a savings account provides a little cushion in case
of an emergency, loss of employment, or disaster. The amount that should be set
aside in a savings account will vary depending on your circumstances.
The important thing is that you start. Over time your
savings account will grow larger and accrue interest. As your employment
circumstances improve, you may want to increase the amount you are putting into
savings.
Just a side note about saving for retirement. If your
employer has a 401K program, it would be beneficial to look into the program.
Many employers have a matching program where they will match a certain
percentage of what you contribute.
If your employment does not have a retirement savings plan,
then you may want to look at budgeting money for your own long-term savings
plan. This plan could be investing in the stock market or an individual IRA.
You may want to seek advice from a financial expert.
Spend Less Than
You Make
This has been a age-old problem. People in general have a
tendency to spend more than they make. It takes strength and inner commitment
to live within one’s means and save for a rainy day.
A simple rule of thumb is to spend less then you make and
save as much as you can. This practice does not have to be done overnight, but
steady improvements will yield great financial dividends.
Setting up your budget takes time and effort, but can be
very rewarding. Getting in control of your financial future can be done with
the help of a budget and some personal discipline on your part. Good luck in
your budgeting endeavors.
© Simple Joe, Inc.
Lyle Evans is a software testing specialist for Simple Joe,
Inc., makers of the popular Simple Joe’s Income & Expenses PC software.
Income & Expenses is a quick and simple way to keep track of your cash flow
and stay within your budget. The Income & Expenses software (http://www.simplejoe.com/incomeexpenses/index2.htm)
is ideal for personal, business, home and club accounting.
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MSBJ Holdings LLC's editorial objective is to provide our readers with a forum for personal suggestions, investment ideas, and health & fitness recommendations. Our articles should not be construed as specific advice for the reader, nor does any article imply an endorsement by MSBJ Holdings LLC. Your best course of action must be based on your individual situation.
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