When was the last time you took a hard look at your finances? Yes, that painful chore of looking back at your statements and realize… Did I spend that much on… (you name it)? The stress of managing your personal finances or lack of there off is taking a toll on the mental health of many Americans today. Primarily due to the current environment we live, but even worse due to lack of guidance on how to make the money work for you.
The key element about money is to first improve the relationship we have with it. Money is just an object, a means to an end. By shaping and re-programing our relationship with Money you will take back the control that you long. When you are in control you tell your money where it needs to go to grow. When we let money control us, we are paying everybody else before ourselves only to get the crumbles of our hard-earned money.
So, I invite you to take control of your finances and learn how to win at the game of money.
The first baby step is to be honest with yourself, get a glass of wine and gather all your statements and bills. First, start with the easy part which is the net amount of income you receive in a monthly basis. Then, gather all your expenses and categorize them by food, home/shelter, restaurant, transportation, etc. Take a pause and realize if you are living within your means or are you spending more than what you make? If the latter is the one that is true to you, don’t beat yourself. Take it as a learning lesson and a motivation to do better.
Once you have scrubbed your statements and know exactly where the money is going, evaluate the following items:
- What are the subscriptions or services that you are not currently using that must be cancel?
- Food is a category in people’s budget that is usually inflated. Are you eating your budget away? Does this number sound reasonable in proportion to your income? Home meals can be more delicious and nutritious than restaurant or fast-food meal. Also, buy groceries that are on season which usually translates to reduce price/sell. This way you don’t only rotate the nutrients you get from different groups of food but you can stack up your freezer with fruits that can be converted to delicious shakes later on. Also, Fast food and restaurant food can be swapped from time to time with a nice picnic in the park enjoying a succulent home snacks/meal and even a bottle of wine.
- Are you giving to other with out having your glass full? This one is a tough one. I have met many individuals with sweet and kind hearts that every time they get a phone call from a loved one regarding money, they send it out even if that deprives them in a constant basis of their basic needs.
- Is there any expense category or items that can be replace for a less expensive option? Car payment is another very personal option. Can you swap your car for a less expensive option? Have you shopped around on insurance or service provider that offers similar service for less? Apparel: For work I invest in good cloth but for errands and park with the kids my go to, is usually less expensive (but good looking) options.
- For big ticket items, ask yourself is this purchase driven by emotion or need? Also, do the proper research to see what store or product will better meet your needs (including quality) for the best price.
After this self-evaluation, budgeting should you come easily. Start with your net income at the top and expenses at the bottom. Start with your basic needs. Rent/mortgage, basic utility bills, transportation and a reasonable amount for food. After your basic needs are met, set up an emergency fund to cover unplanned emergency expenses. Finally, calculate a goal amount to pay off debt. There are apps available that can help you set your budget automatically. My favorite one is mint which helps me track my budget in a weekly basis
Think of this budget as putting yourself in the driver seat and not the passenger. You are in command and this control will allow you to live a more prosperous life.
My Thriftiness 