Thursday, February 25, 2010

Finances and “Allocation of Funds” i.e. Budget

I am amazed, no, that's not a good word, scratch that. It surprises me how many people do not control their money. Are not on a budget, or don't know how much they make a month or spend. It just boggles my mind. How can you not know??

I guess that is why so many of us Americans are in debt up to our eyeballs. If you don't know, then of course you're just spending away? Putting things on credit cards, or just buying what you please? I'm guessing here, I don't fully understand this logic/thinking.

You have got to know. Knowledge is power. If you don't even "know" what you bring in a month, start with doing that.

In my organized brain, and as a SAHM (stay at home mom), this is part of my organization and "cleaning" that I do. It's part of my tasks that I am required to do, and so for me, there has to be a system. Remember when I talked about this post? I got to this point by tracking our income and expenses and knowing what is due when. Are you still with me??

For a month track your income. If you are in sales, and have a changing income, as we do, guesstimate. Take the average or low ball it so you have extra money to allocate. I use the word allocate instead of budget. Budget gives me restrictions and I've never been one to like restrictions. If I say allocate. It gives me the control. I am in charge of MY money and not the other way around. That is the key point. Once you are in charge of your money and it no longer is in charge of you, I believe you are on the your way to success or financial freedom.

Two people that I enjoy listening to are; Dave Ramsey and Suze Orman. I like what they have to say. About certain things. Some things I don't agree with whole heartedly, but for the most part, I like the principles that they teach. Check them out! They are great resources. I always take as much info as I can, then spit out what I don't like. I'm cool like that. Or in my son's words now, "That's how I roll!"

If you know what you make, allocate your funds, and are debt-free! Good for you, and we will see you another day! Or you can stick around and read still and tell me what you know! I LOVE new information, or better ideas. BUT with sooooo many people with debt (yes,we are one of them as well), it might help to read some info and you might just learn something.

Once you know your income, or at the same time you're tracking your income, track your expenses. This is a sample of the spreadsheet I use. If it is too complicated for your life/income/expenses. Simplify it. Take out what you don't use. I am very thorough so that I over allocate instead of under. (I am a numbers geek too and this stuff just thrills me. I LOVE allocating! Almost more than I like food, or shopping. It gives me great pleasure!)


Income
Wages/Salaries (after taxes)
Other Income
Total Income

Expenses
Donations
Mortgage/Rent
Insurance (home)
Repairs/Mainten/Décor
Food


Utilities (use one space,if you don't have alot, or break it down, like I do)
Water
Trash
Electric
Gas


TV
Phone
Cell Phone
Internet

Car
Insurance
Payments
Gas/Oil/Maintenance


Medical
Prescriptions
Co-pays


Gifts –Birthdays (think Christmas)
Debt payments
Kid’s activities
Hubby’s $
My money
Clothing
Savings (long term)
Savings (short term. Ie special trips, luxury item)
Retirement account


TOTAL

So once you know how much "extra" you have. Then you know where you can start to pay off your debts, or put into savings. If you are barely making it buy and you only have enough for your "needs" then it's really easy to allocate money. "Wants", don't really exist. Nor does any extra special savings plan. Until you are aware of where your money goes, it's hard to know where to cut back. If you only have enough for wants, don't get discouraged, I'll help you out here. Come back for more and we'll go through it.

For today, I will stick with this first, since for some, this could be ALOT of information and I don't want to overload anyone. I want to help you. Or inform you. I'll then come back to this and tell you what you can do with this information once you know what your making and spending. Happy Tracking!!


1 comment:

Bikmans said...

Great post!!!!! I am HUGE fan of budgeting and share the exact thoughts as you.

So glad they caught that burglar and your son was ok. How scary!

About Me

My photo
Trying to savor the little moments in our lives that make the memories.