THE SPENDING PLAN

In other words – BUDGET. Some thinks that they can reach their financial goals without a spending plan. These are the ones who are most likely disappointed. Creating a spending plan is the most basic step anyone can take towards making their money work, regardless of how high or low is their income a month.

Many of us don’t really realize that we are spending more than what we earn until we are deeply in debt. Spending without knowing how much money we have would cause a major problem.We should decide earlier on how we put our money into use instead of wasting it unconsciously. Without a spending plan, we are letting our money to control us instead of us controlling our money.                                                      

Budgeting and tracking our expense shows us where our money goes and make us see how our expenditures go up over time. We must track our expenditures so we can make conscious decisions about how to spend or invest our money. This is the difference between never having enough money and being able to afford the things that are really important to you like paying off a credit card, saving for a house or buying a brand new car. 

Another side benefit of budgeting is that it can improve your relationship with your spouse or partner. Money matters are the single largest cause of marital breakdown so budgeting, financial goals and working together toward those goals can have positive effect on your relationship.

KEEPING TRACK OF YOUR MONEY

1.       WRITE IT DOWN.
Always have a little notebook on your bag to record all your savings and expenses. Most of us have troubles for the things that we forget to register. Keep this little notebook with you wherever you go and jot down all your transactions every day.  This is just a little chore that can be done while you are in a supermarket waiting in line or inside a taxi cab on your way home. Or you can even do it in front of the computer every night and record your day’s savings and spending.

2.       ROUND IT OFF
When you shop in a department store using your credit card or ATM card, try rounding off when doing your record, say you shop for 2,316. Record your spending as 2,400. You’ll be off when you reconcile with your bank statement. Some people do it the other way around like depositing an amount of 5,000 but recording only 4,500 on their little notebook and live their lives on the 4,500 and forgetting the hidden 500. This method of hiding can save you on spending more.

3.       USE WHAT WORKS FOR YOU.
There are actually a lot of methods for keeping track of your monthly finances with or without this little notebook or your checkbook. Just decide what’s best for your skills and interests. Some uses labeled envelopes for utility bills, savings, food, etc. when they get their salary, they segregate their money on these envelopes. Others prefer the more traditional checkbook/bankbook method like “deposits, withdrawal, and balance”

SETTING UP YOUR FINANCIAL GOALS.

Save up for anything particular. Start by asking yourself, “What is important to me? List down everything that matters to you and then organize it in order of priority.

Make a list of everything like owning a home, having a family, buy a car, and donate in a foundation for the homeless. Establishing goals and priorities will help make those lists easier. Once you’ve committed to going for one of your goals, you’re spending and saving choices will become automatic.

There are three types of goals:

A SHORT TERM GOAL is something you want to do within the next year. It might be paying off a credit card balance or saving up money so you can pay cash for your holiday gifts this year, instead of charging everything. Maybe you want to splurge on a brand new cell phone or a digital camera.

A MIDTERM GOAL is something with three to five year time horizon. Buying a new car, saving for a trip, or having a particular amount on your savings account.

A LONG TERM GOAL covers a major expense such as buying a house and lot, education for the kids, and your own financial security in retirement. Buying a home should be on top of your list.

LET'S GET IT STARTED

An average high school graduate lacks fundamental money management skills and basic understanding of earning, spending and saving money. These are not taught in our schools and parents aren’t teaching these to their children as well. That leaves it up to you to teach yourself about personal finance principles if you don’t want to stumble through your life by trial and error

Your twenties are the best time to develop good personal finance behavior before you get into debt that you have to pay off or make other financial failures that you’d spend years recovering from. Thirties is still not too late to turn your financial life around if you’re walking on the wrong path.

Controlling your money is way better than letting your money control you. Watch your investments grow and feel how rewarding it is to see your financial goals and dreams becoming a reality.