I wonder how many people will read the title of this blog entry, then not bother reading any further. You know what they say when you assume. Oh well - it will definitely be there loss. When I talk about your business, people automatically assume I am referring to a physical "business". Even if you have a regular job, whether you realize it or not, you have an important business - your personal finances are just like a small business. If you run a company and don't watch what you spend, you get in financial trouble. There are literally dozens of similarities.
Do you have a budget? I'm not talking about that basic set of numbers you sketched out on a napkin one day at Timmie's. I am referring to a physical document where you actually track your expenses and see how much you take in and put out financially. Have one? Great. Follow it? Not often? Then it's not a budget - just some guidelines.
One of the biggest things I have been doing of late is sitting down with people and actually constructing a budget based on their income and expenses. It can be somewhat intimidating as some people have found out. One couple wondered where all of their money went until they did their budget and realized that their expenses exceeded their income by $500 per month. Some small changes and now they are in a plus position, but can you imagine the damage that would have happened if they had not done a budget. Do you have to spend months poring over bank statements to come up with something? Not at all - a simple little excel spreadsheet is more than sufficient. It will provide the basic guide for most people to manage their household finances.
I took a look for something fairly generic that most people could work with. This will link you to a simple excel spreadsheet from Microsoft. You just download it then start filling in the blanks. You may have expenses not listed - simply delete something else and then add what you do need. One simple tip - make sure you list your income first. When you start seeing a bunch of red numbers, that should be a warning flag that your "business" is bleeding.
How do you come up with your expenses. Don't take shortcuts and estimate things. If you want to get good results then remember this - garbage in equals garbage out. Take your time and come as close as possible to the real numbers. The automatic payments from your account are fairly simple, but for other things you will need to do a little digging. If you can get it from the internet, or if you kept copies, get 4-6 months worth of bank statements. These will really help. They will also show you where you spend your money wisely or otherwise. The magic of debit cards is that you often spend money you cannot account for. Let me also say that these issues affect many people - don't assume that someone who makes a lot of money does not have budget issues. If history has taught me anything it's that many people face this problem - the bigger the income, the bigger the potential problems.
At the end of doing your budget you have some "issues" and debts to be paid off then click on this link to help. This simple program will show you how long it will take to get out of debt. One simple rule to remember - it usually takes 2 to 3 times longer to get out of debt than it took to get into debt.
Stay Well and Pay It Forward.