Learning how to balance your income, expenses and your daily life can become an overwhelming and difficult task for many individuals. The key to getting through it is to not allow it to become so frustrating that you give up on it. Take control of your money dollar by dollar and build yourself up to a point where you know you have what you need when you need it. It takes time, dedication and organization but anyone can do it.
- One of the first items you need to get a handle on is where your money is going. To just say all my money goes to bills is not sufficient enough. In order to know where every cent goes, take a small note book along with you for 30 days. That's all you need. Can you handle 30 days to find out where the last several years of your money has gone? Each time you reach into your pocket and pull out any form of payment, mark it down, even if it is fifty cents. What did you spend it on and where? Plastic or Paper? If you do not want to be specific, just write down the amount. You do not have to include normal bills such as gas, utility bills etc.
- At the end of 30 days, total up your days. You may be tempted to total sooner but don't. You want to have a true 30 days of what you have been doing. You will get tired of writing in that book and you will realize just how often you are handing out money. Whether it is plastic or paper, it is your money in the end.
- Make a list of all you bills. Utility bills, car expenses, credits cards, loans, rent or mortgage, insurances, etc.
- Make sure you include the line item various expenses and write down the amount from your book.
- That total amount is what your true expenses are each month. Your book total is expenses that you probably do not have to have but that you have stopped along the way and picked up anyway such as coffee or soda on the way to work, lunch at work and so on. This is the one area that can kill a budget quicker than anything. People DO NOT realize how big this number can be.
- Once you have your number, add 10% of your take home pay to that and mark it as savings. You should be paying yourself each week in the form of a savings account.
Now you have all your expenses right before your eyes. Are you comfortable with the bottom line number? A healthy bank account is a necessary asset in these times. Your bank account should hold a minimum of 2-3 months worth of expenses. If holding this money in your checking account is too tempting, put it all in your savings account.
- Once you have all your numbers, next to each bill, write the date its due and what the minimum amount due is or what you estimate the monthly bill to be, such as $125 for electric. DO NOT FORGET SAVINGS!!!
- Take index cards and write each bill on an index card- Name of Bill, Due Date, Expected Payment
- Once you have all your index cards filled out, Get a Blank Piece of Paper such as computer paper and fold it into equal sections. I fold mine into 8 sections since we both work and get paid on different days.
- At the top of each section write a paydate i.e. July 10 and then July 17th and go on until all sections are filled
- Take your stack of index cards write any bills that are due from July 11th-July17th on the July10th date. Notice, I start the day after payday. If I do not do the bills that day or because some bills now have a 5pm deadline, I want to make sure they are paid before they are due.
- You continue through your dates and your index cards until all dates are filled. You do not have to stop at 30 days. I like to keep mine 3 months ahead. I can plan for unexpected things and be able to shift bills if I have to.
This is fantastic way for anyone to easily follow a budget. When you are making out your bills, you can highlight the bill that it is paid. If there are two in the household, both can see what was paid and when it was paid or when it's due.
Learn where your money is and how much you truly have. Without keeping tracking of what bills you have, you are blindly paying bills as they come and go. You have no gage of a healthy bank account, lifestyle or sense of direction and can easily spin out of control.
When you hold yourself accountable by physically seeing the whole picture of what your money is doing, you are more apt to make better financial decisions and to maintain a healthy bank account. You owe it to yourself to figure out why you leave your house for 40+ hours each week.