As published by the American Society of Administrative Professionals at http://www.asaporg.com (member only site)
As you start the new year with a renewed commitment to “own your money” (instead of it owning you), what are some of the things you will do differently in 2011? Perhaps you will prepare and follow a budget, bring more consciousness to your spending, pay off debt, or bring in more household income. Whatever your goals are, now is the time to start putting your plan into place.
Why is now the time to begin? Well actually, the only time to take action is now. You can’t take action in the past. That time has passed—literally. You can’t take action in the future, as that hasn’t happened yet. All you can do is take action in the present, yet someday seems to always be some other day. It is almost as if you may be telling yourself that someday is a day of the week, as if the calendar reads: Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, Someday, Sunday. Sorry, but the calendar just hasn’t been rewritten to include that…yet.
So in the meantime, let’s get on track with one of the most popular New Year resolutions: save more money by setting a budget (i.e. a savings and spending plan). Budgeting, and the related process of reviewing it to monitor your spending, is actually quite a simple process yet it is often over-complicated. This over-complicating then seems to serve as a really good excuse for why you haven’t been able to get started with your resolution.
Instead, with your new motivation to complete your resolution this year, here are 4 basic steps to support your success:
Begin by estimating where you think your money is going. Establish categories for all of your major spending and then add a column (Column #1) for your estimates by line item for all income (money in) and expenses (money out). If you are sharing your financial life with a partner, then it is best for each of you to create your own estimates.
Start by tracking a recent actual month in a separate column (Column #2). No estimates allowed for actual expenses incurred, for example groceries, phone expenses, or take-out. You may add in estimates for the monthly portions of bills you only pay annually or quarterly, such as insurance or property taxes.
Review your 2 columns.
First review the estimate against your actual results. What do you notice? How close were you? To the extent that your estimates and actuals varied is an indication of your (and your partner’s) level of understanding of your finances.
Second, compare your total income to your total expenses. Are you making more than you are spending, or spending more than you are making?
Third, do a sanity check. If you spend more than you make, you may have just determined why you accumulate credit card debt each month. On the flip side, if the calculation says you make more than you spend, do you accumulate savings each month? This can be a very eye-opening experience.
Based on what you thought you were spending and what you actually spend, set a budget, a.k.a. a savings and spending Plan, into the next column (Column #3). You may find that the word ‘budget’ elicits fears of scarcity or sacrifice. You are not alone. Creating a “plan” often takes away the sting and has the process feel manageable.
An extra tip for you: Be sure to remember to count your cash! Look at the total amount of cash withdrawn for the month and allocate the total to the respective categories. This may have been your missing link in the past when attempting to complete a spending plan before.
If you’d like an easy-to-use template, just email firstname.lastname@example.org and we’re happy to share ours with all of our APC friends. Let’s make 2011 your year to own your money and keep this important resolution to yourself. You will thank yourself for many years to come.
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