This is probably the most requested topic that I receive, normally after someone gets a large unexpected expense, or they start thinking about retirement and realize that they have saved a woefully inadequate amount of money.

I recommend using a monthly time-frame to look at your cash inflows and outflows, because most bills are monthly and four weeks is a short planning period that most people can manage. The first thing to do is determine your monthly after-tax income. Usually, this is the amount of money from your paycheck that gets deposited into your checking account. If your income is variable, then use an average of the last three months. (Any savings account interest income would be a bonus.) Next, list out your fixed monthly expenses, such as rent, mortgage, car payment, phone, electric bill, etc. All of these numbers can be changed in the long-term, but first you need to determine a baseline budget of where you are right now.

Make sure you include all of your utilities; some are only paid quarterly or annually, like car insurance, the water bill, or an association fee. Take these expenses and calculate what they would be on a monthly basis. For example, if your water bill comes quarterly, divide it by 3. If you have semi-annual car insurance, then divide it by 6.

So now you have your fixed monthly income and your fixed monthly expenses. Deduct one from the other, and you have the variable amount of money that you are free to spend any way you want for the remainder of the month. From this remaining amount of money, start listing out your main categories of variable spending: groceries, entertainment, medical expenses, clothing, dry cleaning, personal care (haircut, nails, etc.), and gifts. Take each of these variable expenses and put an amount next to them that you think represents your average monthly spending for that category.

Make as many subcategories as you need to make an accurate estimate. The more precise it is for your spending habits, the more effective it will be for you. For example, food can be broken down by grocery store/fast food/dining out/work lunch/etc. Then go through the last few months of your checkbook and credit card statement looking for any spending that hasn’t been covered so far that you need to include for your situation.

Now you should have a total number for your monthly income, total monthly fixed expenses, and total monthly variable expenses. The moment of truth is when you deduct the two expenses from your income to see if there is anything left over. Don’t panic if it is a negative number – it is far better to discover this out now, rather than building up credit card debt later. Most people comment somewhere along this process, “Oh, so that is where my money is going. I had no idea I spent so much on that!”

Seeing all the numbers in black & white can help you prioritize (and negotiate with all the other spenders in the family). From this beginning budget, you can start to set monthly targets for spending categories, you can focus on reducing the largest expenses, and find areas where you should start doing some price-comparison shopping. And did I mention that saving a 5-15% of your income should be an additional fixed expense? Yes, you need to pay yourself first! Read more other articles about survival auto insurance and dog insurance.

Having a budget is the critical first tool in managing your money. Wielding this tool allows you to finally start making financial decisions based on the facts instead of fiction. You can plan for expenses instead of being caught by surprise. And most importantly, figure out how to move forward with goals like a big vacation, a new car, or investing.

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The Benefits Of Saving Money On A Regular Basis

Over the past few years, I have been saving money each month, not for any particular reason like for example to buy a house, but just in case something big went wrong. It is in a way a form of self-insurance. In this article I write about the benefits of doing this and about my own personal experiences, i.e how hard or easy it has been saving in this way.

Maybe I am being paranoid but I always seemed to have far less money than what my friends had. Four years ago a group of us went to Spain for a two-week holiday. I will never forget the moment when one of my friends asked how much money each of us were taking on the holiday. We all answered one by one and to my horror not only did I have the least amount but I had around two hundred pounds less than the next lowest person. It was not because I was being tight, it was because I did not have anymore. It had actually been a real struggle to save up this much.

When I arrived back from this holiday I decided that I needed to change my attitude on financial matters. I read a few books and spoke to a number of people about the best way for me to move forward. I did not want to have to struggle next year if there is to be another holiday for example.

I believed the answer was to start saving an amount every month which would leave my account via direct debit. I was the type of person who would basically spend whatever I had or earned. If it was in the bank therefore I would spend it. It was to leave my account via direct debit I would have no way of course to spend it.

I set up one of these savings policies and started it a modest £30 a month. I am very pleased to say that it did not exactly have a major negative impact on my social life. The policy itself was in some way linked to the stock market and this itself was quite exciting, sad I know. After a year I received a statement through the post and I was quite happy to see that I was actually worth something for a change. I then decided to increase the amount that I was going to save to £50 a month.

In life you never really know when something is going to go wrong, for example your car breaking down, the washing machine packing up or the need for some improvements to your house. By saving in the way that I know do makes these issues far less stressful to deal with as I have the funds readily available to remedy the situation.

At times of course I have enough money saved to splash a bit on say a holiday or a new car. I would strongly advise other people to commence saving on a regular basis as it has certainly given me a piece of mind. Read more other articles about women’s hairstyles and hairstyles for short hair.

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Wanna know the best advice ever you can get about money?

Here it is…

Let’s say that you are getting regular monthly salary from work and you are happy with it. Now, at the end of the month (and most of the time, two days after you get your paychecks), you wonder where all your money is gone.

You begin reasoning.

30% of it goes to house mortgage.
20% of it goes to car payment.
10% of it goes to credit card payment.
5% of it goes to utility bills.
etc, etc, etc…

“That should be fine. I’ve got all taken care of. Next month, I’ll get another paycheck and the same cycle goes on and on… enough for me to survive the whole life.”

Well, you gotta be careful now.

What happens if your car broke down?
What happens if your kitchen needed renovation after a heavy storm last night?
What happens if you suddenly forgot that you’ve overspent your credit card?
What happens if you fell sick?

Things could be worse, and now is the time that the cliche “Fix your roof on a sunny day” is very much true to you.

You don’t want this to happen to you, right?

There could be thousands of things that could go wrong in our lives but unless we realize that we need to prepare for the worse, we’ll never get ahead of ourselves.

Sometimes, fixed salary could be a good thing for you because you can plan with what you want to do with your money on a predicatble basis. Though I strongly believe that you still need a secondary income – preferably a recurring secondary income – to improve your financial situation at any level.

And, the best plan to improving your financial situation is…

PAY YOURSELF FIRST.

That’s right!

Regardless if you have $300,000 of house mortgage or a $100,000 savings in the bank, make it a habit to pay yourself right after you get your monthly paychecks. This habit will definitely help.

Let’s see…

You’ve been paying everybody you owe every month. You pay the bills, the banks, the mechanics, the who knows who and you actually get nothing, except settling the scores.

There’s just another person that you forget to pay – that is YOU.

Imagine yourself as a bill collector on yourself. No matter what, you have to pay yourself at the beginning of every month (I suggest 10% of your salary. The more is better) – or else you cease to function as yourself.

Never fail to pay your SELF and only after you pay yourself, then you pay the others.

Hard?

Yes, at first, but once you put the action of “Paying Yourself First” into habit, you’ll actually enjoy doing it, knowing that you do good deeds to yourself. Try it once. Then do it the second month. And then, another… and another. PAY YOURSELF FIRST because you deserve much more than the other bill collectors. Read more other articles about wedding bubbles and quinceanera dresses.

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