Organization is the most powerful element in money management. It can be one of most effective ways to gain control and track your spending accordingly. Try to write down or take notes on every purchase you make, even the small ones, such as lunches, coffee, gas, and so on. You may discover that little increments can have quite a large effect on your money saving. Switching to the store brand cola instead of name brand can save you more than you expect!
You may feel that seeking help from a money management firm is pointless, but you could end up proving yourself wrong otherwise. Most of us think that it’s as simple as staying on top of our bills and feeding our savings accounts, but there are numerous ways we can put our money to work that professional money managers know about. By using these firms, you may also learn about these various way you can spread your savings money and end up making some extra money back from it. This may also significantly help you plan the far future for yourself, especially living comfortably after retirement.
Calculate your Net Income - Know all your sources of income after deductions, like income taxes and 401k, are removed. This number ultimately determines what you can spend each month.
Create a Personal Budget - A budget is your roadmap for spending and is a tool to help you achieve your financial goals. Save your receipts and take the
time to add up all of your expenses for a month. Subtract your expenses from your Net Income, calculated in Step 1. If the
result is a positive number, then you are living within the limits of your income. If the result is a negative number, your expenses are exceeding your income. Look for non-essential expenses that you can reduce and recalculate. Ask yourself if each expense is a “want” or a “need,” and try to minimize spending on the “wants.” Most importantly, once you create a budget, stick with it. Make adjustments, as necessary. Having a budget will allow you to control your money rather than your money controlling you. Ask your banker for a copy of the Personal Budget Planner, which will help you create a budget.
Balance your Checkbook - The balance in your checkbook is a
critical number in money management
because it allows you to know exactly
how much money currently you have to
save or spend. Keeping an accurate
checkbook register also allows you to
review where you spend your money. Be
sure to record all transactions, including
ATM/Visa Check Card transactions,
checks, and deposits. For more
information on balancing your checkbook,
request the brochure “Eight Simple Steps
for Balancing Your Checkbook” from your
banker.
Minimize your Use of Credit Cards - Millions of Americans are in debt. Credit
card debt is an easy trap to fall into. The
best way to avoid this trap is to avoid
using credit cards altogether. If you like
the convenience of a credit card, consider
getting a check card instead. Check
cards are accepted at most places that
accept credit cards. The difference is that
the expense is automatically deducted
from your checking account balance,
which reduces your urge to spend more
than you have. Be sure to track each
check card transaction in your checkbook
ledger, just like you would if you wrote a
check.
Pay Down Your Debt - If you have
Credit Card debt or other debts, pay the
maximum to your highest interest rate
debts first and the minimum on lower
interest debts to pay debts faster.
Establish Savings. Pay yourself, first - When you pay your monthly bills, write a
check to yourself and put it in your
savings accounts. If you get your
paycheck deposited automatically, ask
your employer about having a portion of
your paycheck deposited to your savings
account.
Know Your Credit History - Credit
reporting agencies collect data regarding
your credit repayment history and sell this
information to lending agencies.
If your report shows that you are late
paying bills, have maximized lines of
credit, or have bankruptcies or other
collection activities, this will negatively
impact your ability to get credit.
Spending Awareness – A Helpful Tool