Last week we talked about what was upsetting you about your finances and what you wanted to get out of getting your money under control.
Now that you have some roughly defined goals, lets move on to step two. If you had a ton of money left over each month you wouldn’t be reading this. You wouldn’t need to. So, most of us are here because we are living paycheck to paycheck or perhaps worse… credit card statement to credit card statement.
The first thing you need to do is look at where your money is going. You may not be able to do this yet. If you have an online banking account where you can see exactly who got each of your hard earned dollars you may be able to look back and get an idea. If you don’t have this luxury you need to begin tracking your expenses. I am not going to tell you that you can’t go any further until you do this, but it will be hard to get a solid plan until you have done this for a few months.
DO THIS: Come up with a list of everything you “think” you spend in a month. Write each item down with the amount you spend on it. At the top write down your income too. Then add up everything you “think” you spend money on and subtract it from your income. Right now it does not matter if this number is positive, negative, or zero… we will get to that later. Guess what? You just created a budget!!!
The word budget is like the word diet. It has gotten a negative connotation. A diet is truly just what you eat. It doesn’t mean you are cutting calories. A budget is the same thing. It is just what you spend. It doesn’t have to mean you are cutting out all the fun stuff in life. But, you NEED to know where your money is going presently, so you can MAKE it go where you want it to go in the future.
This is not going to be set in stone… hope you didn’t use a pen. Keep this list around for the next few months. I promise you will be adding things to it that you didn’t realize you were spending on. The first month I had to buy dog food after I started my budget I freaked out because I had to take $30 out of the grocery budget for the pet food!! (We don’t have this expense every month.) This month my husband started a new medication that is $20 a month, so that had to be added. Next month when school starts again we will have to shell out $35 a month for school lunches. So, you will be adding to your list. That is okay, don’t freak out every time you do this. We will get your “budget” to a manageable point soon. Just keep tracking that cash flow!!
Next week we will talk about adding more money to the budget. It can be done!!
How are you doing so far? If you have any questions just ask. If you want me to try to help you with your budget please email me.
Tuesday, August 5, 2008
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