Don't
Be Blind to Your Financial Future
By:
Sherry Thacker
So, you've
just finished paying all your bills, and you know exactly how much you have in
your bank account and, overall, you feeling like you are on top of your finances. Are you really? If you don't have a monthly
budget as well as a long-term financial goal, you might as well be blind to your financial future.
To have
a clear view of the person you are financially, and to understand where you will be in two, five or more years, you have to
examine your spending habits over a period of time, at least a year. Just accept it - budgets are a necessary evil!
A proper
record of your spending habits will show you how much money --out of your hard-earned dollars-- is going to things like entertainment
expenses, gas and car expenses, and other day-to-day items that we tend not to think about in the big scheme of things.
If you aren't
handy with creating your own spreadsheet, try some of the software programs on the market, such as Microsoft Money, or even
Home Budgets For Dummies by Atari. And if you are intimidated by software, there is always the binder technique, which is
just as good. Get a large binder, and use it to keep all your bills and expenses divided by company. For instance, put all
of your telephone bills together, all of your electricity bills together, etc.,
and this will show you what you spend in each area of your life. This works equally well for both personal as well as business
finances.
The bottom
line is to know the real truth about the numbers.
To do this
effectively, you have to start keeping every receipt. How often have you gone to
the bank machine, withdrawn some money and a day or so later have no idea why you only have some loose change in your pocket?
It's happened to everyone. Good records are the backbone of every financial plan.
If you notice
that most of the money coming in is also going out, that should set off some warning bells. As a general rule of thumb, you
need to set aside at least 10 to 15 percent of your weekly earnings for an emergency fund. When you make it a habit to always
pay yourself first, it is much easier to save or have a little nest egg for those rainy days.
If you can't
do this, you will need to examine your expenses and see where you can trim. In today's society we tend to think of certain
luxuries as absolute necessities - even when they aren't. If you can't pay yourself first, consider reducing your all-inclusive
cable package, or find ways to reduce your telephone bill, or brownbag your lunch every day of the week. Find ways to cut
your costs.
When you
are able to look back and identify your own personal fiscal trends, only then you can then evaluate your current spending,
and predict your future financial well-being. Open your eyes to your real spending
habits - don't be blind!
Stay tuned
to next month’s article which will give you a step by step guide to planning ahead using your monthly cash flow.
Sherry Thacker is the founder of WENS, a women's networking group with the goal of empowering and
promoting women, both in life and business. WENS is also a resource for information on career and business, visit: http://www.wenscentral.com
