Tell Your Money Where to Go
Tell your money where to go, then make sure it gets there.
Like a road map or the blueprints for your dream house, a Spending Plan shows where you are and how to get where you want to be. A Spending Plan is like strapping on a set of wings and learning to fly.
In its simplest form, a Spending Plan is a sheet of paper on which you write your income for the coming month and what you will do with every dollar of it. You “prepend” your paycheck on paper before you part with any of it. Think of it as a dress rehearsal where you sit down with your money and you tell it where to go.
Creating a Spending Plan
A good Spending Plan addresses every bit of income by giving every dollar a specific job to do. Some will be directed to pay the rent or mortgage payments, others will be assigned to food, utilities, and right down the line through your bills. Some will fulfill your long-term savings account, others will go to work hard in your giving, while some of those dollars will bring balance to your life as they are assigned to entertainment and fun. Still others of your hard-earned dollars will follow your orders by heading to hiding places like retirement accounts and investments where they will be kept in reserve. A good Spending Plan becomes a great predictor and leaves a lot less to chance.
Write down your total household take-home monthly income. Because many expenses are billed monthly, you will find it easier to calculate your income this way so it matches most of your bills. Regardless of how you get paid—weekly, biweekly, twice a month, monthly—to come up with an average monthly figure, multiply your paycheck by the number of paychecks in a year and then divide by 12. Or, for a more precise number use the table below.
Helpful Hints and Tools
You need to create a “written” Spending Plan. There are many ways to do that. I suggest you choose the method that appeals to you. At the very least, you’ll need paper, pencil, and a basic calculator to track your spending throughout the month. You will find a Spending Plan template on page 110 that you can customize to fit your situation perfectly. Note the side-by-side columns “Last Mo.” and “This Mo.” I like this because it allows me to see my actual spending from last month compared to what I plan to spend this coming month in that particular category.
This is a simple method of managing cash that you can team with your Spending Plan. First, get some envelopes. Then, write a spending category on each one and fund it with the amount you have allotted. Example: groceries— $250. As you buy groceries throughout the month, spend from this envelope only. Record the “What?” and “How much?” right on the envelope.
Reset your due dates
It can be a problem if all of your big bills come due about the same time, but you get paid twice a month. Here’s an easy solution: call these companies and ask them to change your due date so due dates are spread in a way that works best with how you get paid. Most companies are happy to do this.
Sending checks through the mail has become slow, dangerous, and unreliable. Sign up for your bank’s online bill payment system so you can utilize online bill pay and automatic payments.
Online bill pay
Here’s how it works: you authorize money to be transferred from your bank account to your creditor’s account. You do this all online through online access to your bank account. It’s easy, user-friendly, and safe (transactions are encrypted). You can see immediately that you made the payment, plus your online account organizes your records and receipts. It is very cool and will simplify your financial life.
Most lenders, utilities, and other regular billers offer auto-bill pay without any kind of fees. In fact, some lenders and others give you a break on the interest rate if you will agree to auto pay. The way it works is that you authorize a specific creditor to take your payment automatically from your checking account every month. You still get your statements and bills in advance, but your account does the work for you. Plz Visit For Moviescounter
This online service links with your bank and uses envelope icons to apportion your paycheck and keep track of spending. A virtual version of the old-fashioned envelope method (where you cash your paycheck, then divvy it up into envelopes that are labeled with spending categories like Rent, Food, etc.), Elopes gives you a visual cue of how much you’ve spent and how much money remains in each of your spending envelopes. If you go over in any category, the line item turns red. Cost: about $8 a month.