Organizing Your Finances

A pressing issue across our nation right now of course is the economy. I'm not a financial planner, nor am I by any means a financial expert, but I do know that it is pretty easy to let your pocketbook get the best of you if you don't account for what you are spending your hard earned money on. My best suggestion for getting your finances organized is to create a budget. And stick with it. I've also heard (and experienced) that if you write down every penny that goes out of your wallet you become more aware of what you're spending your money on - the idea here is to pin point areas that you can cut out. This is where the budget comes in. Budget for everything you are planning on spending money on - I'm talking about buying lunch at work, your daily Starbucks, cigarettes, etc.

I have included a mock-up of my budget, of course I have changed all of the monetary amounts. But, I want to explain to you how easy it is to create. Take a glance at it and notice all of the different columns and inclusions. You can modify this however you want, but I think that it is a relatively realistic budget, but of course you probably have different expenses than Steve and Sally do.

I created my own document using Microsoft Excel that outlines my monthly expenses and income. If you're not comfortable using formulas in Excel, go to www.office.microsoft.com and you can download various templates for all sorts of different budgets. Those templates will have all of the formulas and you can pick and choose what you want to include. There are many other online or computer programs that can help you to create a budget, or if you prefer, you can just create one by hand. So, browse the web and find a budget worksheet that works well for you. Some websites that come up on a search may be beneficial in helping you find things that you can eliminate from your monthly expenses.

Below is Steve & Sally's monthly budget. If you click the image it will enlarge so that you can read it.



Some things to note:

The budget that I created is for the most part very much set in stone. If you have a lot of variable expenses that come in to play, like kids sporting expenses, emergency car service fund, or Christmas gifts, you may want to add a column in your regular monthly budget that includes some wiggle room that you have already claimed to use for those variable expenses. In Steve and Sally's budget that is where the miscellaneous column comes in.

I also really like the idea of setting aside money for a rainy day. Yes, this is saving money, but to me, it really is just setting it aside. You're planning on spending it once it accumulates, instead of putting it in a high-interest account. This "slush fund" can be included in your budget too - but should be kept separate from any investments, savings or retirement fund contributions, as well as your disposable income.

Lastly, if you are in any amount of debt, make sure to include paying off credit card bills or loans in your monthly budget. I think that it can be very beneficial to include a plan of how you will pay off your $10,000 credit card bill, or whatever it is. I have to believe that if you sit down and create a plan of how much you're going to throw at your credit card bill each month and determine how many months it will take you to be in the black again you'll have a sense of relief that it is possible to get it paid off.