I Wasn't Paying Attention: Where Does My Money Go and How Can I Get Some Back?
|Janet L. Hall is a professional organizer, speaker, author, and trainer. Janet
has been sharing her organizing tips and skills for the office, home, and
computer with individuals and groups worldwideóthanks to her teleclasses and the
internetósince 1996. You can learn more about Janet by visiting her web site at
planning, and "overhalling" your hard earned money can help you
reach any financial goals that you have, help you in getting out of
debt, and help you gain back control of your money, your future, and
Dawn Rivers Baker of WAHM &
Mompreneur has a great series, Financial Management 101 in which she
writes, "Managing cash flow is the simple matter of projecting cash receipts
and needed cash outlays within a certain period of time - a week, a
month, a quarter, a year - ..."
Good cash management consists very
basically of three things: knowing when you need money, knowing
where that money is going to come from, and knowing where you can get
money from if you fall short. With good cash management, you may
find yourself with a bit of money left over when you have paid your
Listed below are the percentages
(based on net spendable income, after tithing and taxes), according
to Larry Burkett, that you should ONLY
be spending in each category of your budget:
Housing - 38%
Food - 12%
Automobile(s) - 15%
Insurance - 5%
Debts - 5%
Entertainment & Recreation - 5%
Clothing - 5%
Savings - 5%
Medical Expenses - 5%
Miscellaneous - 5%
To meet the 8% that you should allocate for school/child care, if
needed, you will have to make adjustments of the above categories by
an equal amount.
To have a true sense of where you're
spending your money daily, keep a daily expense log for at least one
month. Enter in everything that you purchase DAILY! Even that .25
cent pack of gum or mints. Get a little notebook that you keep with
you and just do IT! This will allow you to see where you can cut
back and/or start saving.
For instance, if you buy a newspaper
everyday at .50 cents a pop, and $1 for the Sunday paper, you've
just spent $208 for a year of reading what? DO you read the whole
paper or just the home or sports section?
If you read the paper at home, does
it start to pile up causing more clutter and more of your time to
dispose of it?
Where else can you get this SAME
information? Maybe on the Internet (if you're reading this, you are
probably already paying for Internet service). At the library? Can
you read your co-workers? Do you also watch the television news?
How important is it for you to read
the newspaper everyday and see $208 go out of YOUR pocket every
How much bad news do you really want
to read and listen to everyday? Be selective! Remember how much your
time is worth!
This and your other daily habits are
what I want you to take a STRONG look at and see what you can
OverHall and Balance, see what you are willing to give up, what you
don't really need, or what costly habit you can change or cut back.
As Deborah Fowles, financial writer
of about.com, stated in her article Financial Planning.
"To those of you who think you know where your money goes without
keeping detailed records, I issue this challenge: keep track of
every cent you spend for one month. I promise you'll be surprised
and perhaps shocked by how much some of your 'small'
expenditures add up to."
You might think all of this is too
much work, am I right? Well let me ask you, how much work will it be
or take when you are retired and have no savings, no investments, no
assets, no money, no NOTHING because you didn't control your cash
If you're already retired, how hard
might you be struggling because you aren't paying attention to your
Dr. Lair Ribeiro, author of Success
Is No ACCIDENT wrote, "If you go on doing what you've always
done, you'll go on getting what you've always got."
STOP procrastinating! Get your
priorities in line! Get focused! OverHall your cash flow so you can
stop worrying about money, stop living from pay check to pay check,
stop being late on your bills. Work on balancing your cash flow so
you won't have problems or troubles NOW or in your later years. TIP:
The best time to work on this is when you are paying your bills.
Business Owners: The Small Business
Development Center in your neighborhood will be happy to help you
for FREE with your business cash flow!
Hopefully, after keeping a daily or
monthly log of expenditures, youíve begun to notice your pattern
of spending habits. You should be able to see where all your money
is going and not just wondering. You should now be able to look at
what you can cut out or cut back on.
Why do you need to do this "OverHall"?
Several good reasons could be if youíre
having troubles making ends meet, living from paycheck to paycheck,
or donít have any money in reserve for unexpected emergencies.
Other reasons could be that you want to buy a home, take a vacation,
buy new equipment for your business, go to college or send your
children to college. Still other reasons could be that you're
self-employed and you need to save or invest for your retirement.
Letís get started by making two
lists, one for your NEEDS and one for your WANTS.
Whatís the difference?
Let me give you an example of how I
see NEEDS vs. WANTS. A NEED is something that you NEED to survive
such as food, shelter, and clothing.
A WANT is something you desire.
Something that you might already own, but you WANT another or a new
one such as shoes, or a jacket, or a car. A WANT can also be
something that you donít currently have. As humans, we all have
unlimited wants, therefore we must make choices. In economics this
is referred to as "opportunity cost", the highest-valued,
next-best alternative that must be sacrificed to attain something or
to satisfy a want. Some refer to this as a trade off.
Now you need to ask yourself how much
you are willing to spend or need to spend on your needs to survive
and are you spending too much? Do your clothes have to be new, with
big name labels? Does your home have to be near the water with a hot
tub and a swimming pool? Does your food have to be the best cut of
meat or dining at fancy restaurants every night? You get the idea?
What about your WANTS? What are you
willing to trade off to make your WANTS a reality?
Letís look for a minute of a WANT
of a vacation to Alaska. You will need to take some actions and ask
yourself, possibly, some hard questions, and make some hard
|| Do you have to save for this and
how will you save?
|| What steps must you take to
estimate the cost of such a vacation AND what steps will or can you
take to save for the trip?
|| How long do you want to vacation?
|| How will you travel and what are
those costs? Planes, Trains, Automobiles? Hike, Bike,
|| Where will you stay and what are
those costs? Hotel, Motel, Inn? B&B, Igloo, Tent? Friend,
Relative, Friend of a Friend?
|| How will you eat and what are
those costs? Bring or buy food there? Eat out? Skip some meals?
|| Do you need to purchase
"special" clothes? Where can you purchase them? How much will that cost?
|| When do you want to vacation in
Alaska? Now, next year, five years, or ten years?
Once you find the estimated answers
to those questions youíll need to look at how much you need to
save and where in your daily expenses can you cut back.
TIP: Use this type of exercise for
any wants you have for your life and business.
Youíll discover if you can really
turn your wants into reality, if they are realistic and feasible.
Top 10 Tips for "OverHalling"
||Plan, plan, plan ahead.
|| Donít pay
|| Shop at thrift stores, consignment shops, secondhand
boutiques, warehouses, or in the slightly damaged department.
|| Get in
a co-op or collectively buy with others.
|| Donít shop with your
emotions, use your conscience when shopping.
|| Rent big ticket items
when possible (for instance, if you need to fold 10,000 documents on
a quarterly basis or use a saw-zall once a year).
|| Use the library.
|| Comparison-shop for
|| Donít buy because itís on
sale or because you have a coupon.
Letís look at some items or
habits you can stop this month in order to start saving (Use your
items and figures that you had logged into you daily expenditures).
$208/yr Ė newspaper
$72/yr Ė 1 movie a month at $6
20 breakfast drinks a month at $4
$48/yr Ė 1 magazine at $4 a
GRAND TOTAL of SAVINGS a YEAR=$1,048.
In ten years that would
Now, think a minute, what can you do
with that $1,048 extra a year or that $10,480 in ten years?
Get a big jar; water bottle, tin can,
piggy bank, or something to start throwing your MONEY into (donít
forget a container for your car). If you pay cash for a daily
newspaper, throw your paper cost DAILY into your container. If you
pay monthly, write yourself a check for that cost.
Start a new habit by being selective
on what you NEED to read and see if you can read it on the Internet
or at the library. Can you hear about it on the TV news? Better yet,
try a life change and STOP reading or listening to the news and
start making your own "news" to share with relatives and friends.
When you go to rent a movie, STOP,
and throw that money into your container. See if the movie is at the
library, if a friend has it to borrow, or wait for it to come out on
Start making your "special drink"
at home in the morning. You are now able to ENJOY your "special
drink" because now you have more time because; you donít have to
drive to the "special drink" place, get out of your car, stand in
a long line, wait for your order to be prepared, and
guzzle down your "special drink" while sprinting off, racing off,
or dashing down the street to wherever you might be headed! NOW you
can relax and throw your $4, your stress, problems, and concerns
into your container and REALLY ENJOY your "special drink". (Whew,
didnít mean to get off on a rant).
That magazine that comes monthly,
that you never have time to read, and is piling up on the table or
floor; stop it from coming into your home or office and write
yourself a check at renewal time! If you think you canít live
without it, see if a friend gets it and ask to borrow. See if itís
on the Internet or at the library.
Iím not trying to tell you to be a
penny pincher or a miser. I just want you to REALLY look at where
your money is going. Stop, think, and look at how you can "OverHall" your daily expenditures so you can get some of your hard earned
money back and bring a sense of financial BALANCE back into your
If you find you are spending money on
something that TRULY brings happiness, pleasure, comfort, and
BALANCE into your life, then donít give it up. Although you might
consider cutting back on that item.