A Fiscally Responsible 2017
Starting off a new year I'm sure many of you would like it to be a financially secure year. To have a fiscally responsible year you will need a strong financial foundation. Here I'm going to give you the basic steps to show you where you are and help you get where you need to go.
I want to quickly go into what it means to be fiscally responsible. In short, it means being responsible with your money. What we are looking for is for you to end 2017 better than you started. To have more money in your bank account, have more saved for retirement, and have less worry about your finance's.
Many people fall into the same money traps over and over. I think most people would like to feel financially secure but they are not sure where to start. Well here is step one and it will probably be easier than you think.
1. Don't change anything. Sounds easy right! Before you can improve your financial standings you need to know where you stand. For one month don't try to change anything. Live and spend as you normally would. Unfortunately there is a catch. You need to save a receipt for every single thing that you spend money on. Every bill, every dinner, every gas receipt, all of them. So step one, spend as normal and save EVERY receipt.
2. After one month you will have a bucket of receipts. Now it is going to be time to consolidate all of your information. There are many household budget forms that you can find online, here is a good one here https://www.vertex42.com/ExcelTemplates/monthly-household-budget.html.
Find a form that you like and stick with it, you will be using it for a while. Once you have all of your receipts for the month you will need to fill out your budget sheet (fill out the "actual" column if there are columns for "actual" and "budget"). You will see that you need to add up all receipts for each category and fill the categories in. On the top of your budget sheet should also be a section for income. You will want to fill in that section as well so you can compare the amount of money that is coming into your house and leaving your house.
3.Next, you need to analyze your results. After putting all of your information into your budget you will clearly be able to see how much money goes into your household and how much you spend each month. Many people would like to save more and this will help you see how you can do so. By looking at your budget you should be able to see where you can cut back and start to save money. If, for example, you notice that you are spending $500 per month on dining out you may be able to cut that amount down to $300 and put $200 towards savings.
4.Now repeat, well sort of. Now that you know what you actually spend on average per month you can create a budget that you will try to stick in. Start small! Find miscellaneous expenses that you could cut a little bit, and you probably won't miss out on them. We need to start the savings snowball. Even if you only save $50 a month you will notice that after a while you will start to increase your savings. Once you pick where you want to save you will start a new budget sheet for the month. You will write in your budget for the next month,now filling out the "budget" column. Only change the categories you plan on cutting back your spending and keeping the others as what you actually spent in the previous month.
The key to all of this is to figure out what you need, set a budget, and stick to it. Setting an extremely aggressive budget will almost always end in failure. Like I said earlier, start small and try to make changes in categories you won't notice too much. Dining out is usually a good category to start with a small cutback. If you are having trouble figuring out where to decrease your spending you can email me your budget sheet directly and I will work with you on finding an area where you can cut your spending. Michael@FalconsFinancial.com