My Finances - Where the hell do I start?

This is something that everyone wants to do – but sometimes just doesn’t get quite around to sorting it out.  Read this article and take some time this week and look at it. It really is easy and not as stressful as you might think.  Trust me all your need is a spreadsheet and some envelopes! Yes it is that simple..... read on for more information.

Finances are hard thing to look at.   Sometimes we are all going from week to week in the hope that we get by.  Others we are determined to save and then we dip in to the savings.  It is so hard to try and start anywhere to organise your finances.  Whether you have a debt that needs to be paid off or you are just saving for that rainy day or upcoming events.

Over the years of trying to save my money I have come up with some ways which have been of use to me.   I am going to share these with you and I hope that you will find them beneficial.

Reviewing your monthly / weekly spend

Look at your weekly / monthly wage.  Review your money, where is it going, is it being wasted away on unnecessary items or is it going to worthy causes i.e food.    Perhaps you can make a budget spreadsheet.  Don’t reinvent the wheel take a look at Microsoft Word templates or I can send you mine if you are interested in it.

If at the end of the above task you are still unsure where the hell your money is going – download an app for your phone which will allow you to track each purchase in to a category as you buy it.  Don’t cheat it – you are only cheating yourself.

Where is your money going ?

Once you have established where your money is going – you can determine how much needs to go where.   Remember there are only a few items which are a necessity to your everyday life and these are:

Rent / Mortgage,

Utilities,

Child related expenses ( kids clubs, schools etc)

Loans / repayments

Food,

Car expenses, i.e petrol,

Then you have annual expenses,

Health Insurance

Car service,

School Fees,

If you can think of anything else add it to the above list as appropriate.    Next – put each of the above in a column of a spreadsheet and then mark the relevant month/weekly out.  So your spreadsheet will look like this. ( I get paid monthly )

	Jan-12	Feb-12	Mar-12	Apr-12	Etc
Wages	1200	1200	1200	1200
Rent / Mortgage,	250	250	250	250
Cable TV	150	150	150	150
Gas	50	50	50	50
Electric	50	50	50	50
Child related expenses	0	0	0	0
Loans / repayments	50	50	50	50
Food,	400	400	400	400
Car expenses, i.e petrol,	150	150	150	150
Total Required Per Month	1100.00	1100.00	1100.00	1100.00
Remaining each month	100	100	100	100

Ok so now you have broken down your expenses every month as the required expenses.  You may have more or your may have less – but notice you put your wages amount in the top row, list all your expenses, and minus from your wages total, you will get the amount you absolutely require each month.   Some expenses may vary and leave you with month left over. I will discuss that later.

Savings

You will notice under the required amount, there is a small section which shows the money that is surplus to your own requirements – immediately set up a bank account and arrange for that amount to be taken from your wages each month directly in to your savings account.

If you don’t have a savings account, set up one.  Take a look around at what has the best rates and how you can access this money – make sure it is an instant access unless you really want to see a return on your money.   With instant access to your cash, this means that if it is needed urgently you can access it no problem at all.  Take a look at your bank options, and other banks – look at credit unions and post office – what ever will work best for you is the one to go for but definitely research.

Paying bills

Dependent on how you pay your bills, it may online or a post office.   Get that money out straight away – pay your cable tv bill early so you don’t have to worry about it – same goes for gas and electric.  Why wait until the due date as you may end up forgetting about it and getting charged a late payment.  Keep an eye on these bills regularly as you may find that you have over paid and be able to leave a payment go for one month – whoo hoo extra money.

 

For others such as groceries and car expenses – take the money out of the bank and divide it in to envelopes with the title of what it is required for clearly marked.  So you will have envelope for car expenses with 150 in it, you will have an envelope for groceries.  Now, the important thing to remember is that once this money is gone.... it is gone.  You can’t rob money from one and put it in the other.    If at the end of the month you discover that hey I didn’t spend 150 on groceries this month – take that money out and do one of two things with it.

Put it straight in to your savings account, so you are building a nice little nest egg for those annual expenses or take some of it and buy a bottle of wine as a treat or put it towards a new top or dress that you have been looking at.

Annual Expenses

With your annual expenses, I would recommend sitting down now and discovering how much money you actually need to pay these expenses.  My health Insurance is over 1200euro annually so I have to budget to ensure that I have this money ready and available to me by August each year.  With this in mind, in my own monthly spreadsheet I have a column specifically for that – so I know each month how much goes in to this savings fund for that.  Any extra cash that I have left over at the end of each month goes in to my holiday savings account so that I have cash to spend when on holiday, or even enough to pay for my holiday.    I love my holidays each year so I have a column whereby I put a small amount away each month to pay for a  holiday.

People have different methods of what works for them – and the above really is only the basics that will get you started and thinking about budgeting and financial planning.

Financial budgeting and planning doesn’t need to be hard or stressful but you just need to start it and set your goals.  Set out what your monthly expenditure actually is – set out your annual expenses.

What works best for you with your budgeting and saving – leave a comment and share with other readers.

S