What a month we’ve had, discussing all of the different parts of financial organization. Balancing the in-come and the out-go can be a tightrope but with a little planning and organization it can all come together.
In addition to the great workbook in my library (sign up below for access), I also want to make sure you see these printable PDF files on Etsy!
Let’s start with the biggest expenses. Typically that is housing (the rent or the mortgage). For many households, it can also be debt which might include student loans, car payments, or credit card payments. Child care and medical care can also take a big chunk out of your paycheck. Some of these expenses are fixed which means there is no flexibility in the minimum payment.
Where can you save money on outgoing expenses?
While some expenditures are fixed such as the rent, some are more fluid such as groceries or entertainment. If you wonder why your money runs out long before the month runs out, tracking your spending will help narrow down what is happening with the money. Oftentimes, it is a $5 coffee here or a $10 movie ticket there but it all adds up. I am a huge spreadsheet girl and I have created several to track expenses. At one point, my grocery bill was out of control so I even broke the grocery bill down into its own spreadsheet – hand-entering how much we spent on dog food and coffee creamer and ice cream. Once you have a better handle on the spending, you can start to figure out where you could start saving. Can you download apps to take advantage of grocery store sales? Can you start eating leftovers more often? If you go out to eat, can you reduce your alcohol tab or maybe even split a meal with a friend?
What do you want to use that savings toward?
Now all of this tracking only benefits you if you have a goal in mind. Once you carve out that extra money, what will you do with it? Do you want to reduce your debt? Do you want to take a vacation? Maybe you just need to build up a nice cushion in your savings account. If you start to miss that $5 coffee, it will be easier to stay on track if you keep your ultimate goal in mind. There is no incentive if you don’t know what you are working towards!
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.
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!