So for the month of May, I want to talk with you about your household financial organization: planning a budget, tracking your spending and expenses, reducing your debt, and tracking your savings. There are a lot of moving parts to organizing the financial parts of your life, and I have some tools to make it a little easier.
In-come versus Out-go
Budgeting all boils down to balancing the “in-come” versus the “out-go”. And oftentimes, the budgeting downfall is more of the out-go than the in-come. Tracking both can really help establish the household budget and keep it on track. In this series for May, we will be talking about tracking our spending, reducing our debt, and improving our savings. So let’s get started!
Fixed and Flexible Expenses
Some of the expenses are fixed such as rent or a car payment. However, many of our regular expenses are flexible in the sense that they could be managed differently. Perhaps keeping the thermostat a degree or two differently could impact the energy bill, or you might be able to reduce your cable bill by changing to a smaller plan. Being able to improve the flexible expenses will go a long way in helping you achieve that financial organization!
Without a good tracking system, it is hard to know where all the money goes. I suggest tracking every outgoing dollar for two months (three if you have some quarterly payments) to really get a handle on the spending. There will be some areas that will really surprise you I’m sure!
Almost everyone carries some type of debt. Albeit, a mortgage payment is a different type of debt versus a credit card balance. But reducing the debt where you can will really help the bottom line of your household budget.
In addition to reducing the debt, creating a savings plan is essential for financial organization and peace of mind. Whether you are saving towards a cushion of cash or a specific vacation or even retirement, keeping track of what you are saving will help keep that goal in mind. And remember — pay yourself first!