Does it feel like your money is slipping through your fingers? You get raises or bonus's at work, but somehow your expenses just seem to get bigger?
Life is getting busier and busier, with the pressure of careers, kids, family, homes, cars.. and the list is endless. Everything else comes first. But we can only juggle so much, and our financial future ends up being at the bottom of the list, to be looked at "later"
But if we don't look at our finances on a regular basis, then we will not have a clear path to follow, and we will just be spinning our wheels, then look up one day, and think "where did all my money go"?.
Some people make an effort at tax time, not because they like doing their taxes, but because it forces them to see just how much they made last year, and what is left.
But unless you actually set aside time each week or at pay time to look at your finances, then your finances, will continue to be last on the list of things to do, and not get the attention they need.
If this conjures up visions of calculators, and interest tables, and investing, and this terrifies you, you must realize, that it does not have to be like this. You just need a simple plan to get started with. Something that only takes a couple of hours or less to set up, and then looked at on a timely basis.
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If you have a fairly simple life right now, you may only need to spend an hour or two on your finances per month, but if you are married, have a house, kids, bills, then you need to stay on top of your finances on a weekly or bi-weekly basis or at least make it a habit at pay time.
To get money back into your pocket, and not slip through your fingers, you need to see where it is all going. Take an afternoon, put on a pot of coffee, and your first step is to find all your bills, bank statements, credit card statements... everything to do with your finances. If this takes all afternoon, then so be it. This was your first step, and you should pat yourself on the back for getting started, even if that is all you get done today, that was a great start. Now make a date for the next step if you are tired out.
Find a box, or something to keep them all in for now, then get yourself a pad of paper, pencil and simple calculator, and make two columns. In one column list all the bills you pay every month, that you cannot change. These are fixed expenses, such as mortgage, or rent, or car payment, or property tax bills, credit card payments, any thing that is on a regular basis for approximately the same amount.
In the second column, list all other expenses, such as groceries, spending, anything that is not fixed and could possibly be changed. These are variable expenses.
By separating these types of expenses, you can see where you can make some changes, usually the variable expenses are more in your control, and you could start there. Such as being more careful with groceries, or taking your lunch to work to lower spending, cutting back on your cell phone bill .. that type of thing.
But for this exercise, you need to see the big picture. Take your two columns and add them together, then subtract them from your take home (net pay) for the month.
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If your expenses are larger than your take home pay, then you should pat yourself on the back again for catching this now. This could be the very reason, that credit card or line of credit is getting bigger, or why some bills are not getting paid per month, since you don't have the money to cover them all right now.
With such busy lives, these are things that can get by us. You grab a coffee here, or a quick lunch out, or you are so tired at the end of the day that you are grabbing more and more takeout. Eating out can take a huge part of any spending budget. But living day to day, you may not realize just how much you are spending. This exercise will at least help you find that out. A credit card statement is also a good way to see what types of things you are getting your credit card out for, are they necessary? or are they something you could be cutting back on? I know many people, who just pay a set amount to their credit card every month, but don't bother to even open the statement, until they got notice that their payment was not even covering the minimum amount anymore!
If you notice from this exercise, lots of cash withdrawals from your bank account, and you are not sure why, then take a small pad of paper and pencil around with you and write every single purchase down for the next two weeks. You will be amazed at how a dollar here and a dollar there add up.
After doing the above exercise, do not beat yourself up over it, just be happy that today you took back control. Now your finances, will be at the top of your list. Now that you know where you are, if you can spend even 1/2 hour each pay, making sure you stay on track, then you will find that money that is slipping through your fingers, is actually ending up back in your pocket.