A new year signifies a new start. Resolutions are being made and saving money is always at the top of everyone's list each year. I wanted to write a few posts about personal finance management. While I am not an expert by any means, we've paid off a lot of debt in our marriage. These posts are intended to give you tools to make decisions to help your finances, whether you want to have a balanced budget, pay off debt or even save a little bit.
These first tips are things I personally did as we were getting out of debt. They work but only if you work them. I'd love to hear your ideas in the comments of this post too!
The first thing to do is calculate all sources of income for your household. Put together a spreadsheet listing income sources and amounts for the past 30 days. This will give you an idea of how much money is coming into your house, which is the first step to determining how much money is going out.
Use our Savings Tracking Tool to track your grocery spending and saving efforts!
List all of your regular monthly expenses such as rent or house payments, car payments, credit card and loan payments, gas, food, utilities, cable, internet and others. Try to list exact numbers, or estimate up if your expenses vary. This will give you a good idea of what your basic expenses are.
Track Every Penny
Spend an entire month tracking every cent that you spend. Write down your beginning balance and then every dollar in and every dollar out. This is the key to determining where you're spending money.
Do an Honest Review
Compare how much money you're bringing in to how much you're spending every month on bills and other expenses. Are you spending beyond your means? Are you allocating money for savings, investments, and retirement?
If you have money drains, determine what they are. Are you buying too many lattes? Is your dining out expenses the same as your grocery bill? Ask yourself these honest questions because this is going to be where reality sets in to allow you to make changes.
Armed with the overview of your income and expenses, you can control your finances more effectively. Once you have this information laid out in front of you, it will allow you to fine tune your finances little by little until you're putting more money into savings and less into “money drains” from month to month.
Determine ways to reduce these money drains. Can you brew coffee at home to save money every week? Can you cook at home to save money on eating out? A few dollars saved every month in different areas of your budget can definitely add up to your benefit.
Once you know how much money you have coming in and going out, you can start directing your money toward what's really important to you. Trim down your expenses or find ways to increase your income.