|
|
| |
|
Taking Back Control of Your
Money
By Loral Langemeier (as seen on the
Dr. Phil Show and website)
You want control of your money, right? Yes is
the right answer. To begin to build wealth one of the first things you will
need to do is get control of the money you currently have.
Here are
the steps to begin the process:
Step #1 - Understand where you're
spending your money. Start a money diary or journal. It will take you a few
months to really understand your "unconscious" money habits. The first step is
to get a note pad and start recording every time you spend money. Some of these
will be easy because you know what you spend on mortgage or rent each month,
and you have a statement for your utility bills. However, there is no statement
for food, clothing, gas, gifts, etc. These will be the items you need to
document in your Money diary for the next few months to know where your money
is going. Get in the habit of saving receipts and recording what they were for,
if you don't like the note pad idea.
Step #2 - Create a written
spending plan.
"Tell your money where you want it to go, before you
wonder where it went."
Create a spending plan to accompany your
money journal. In your spending plan you want to decide where and how much of
your money you (emphasis on you) want to go where. I know what you're thinking
- that's just a budget. We don't use the word budget. It's too restrictive and
most people have negative feelings about budgets. What we want you to do is
consciously spend your income on paper before you spend it in reality. This
way, you'll know where your money is going.
Step #3 - Track your
spending and, based on your results, create new money rules if necessary.
Record your income at the top of the document, and then list by category all
other expenses that you expect monthly, quarterly and annually. Quarterly and
annual expenses should be converted to monthly allocations. Make your first
draft of this immediately while you're developing your money diary. Go back and
look at bank statements, credit cards, past bills, and any receipts you have,
anything that will give you a good estimate of what you have spent in the past.
Look at the trends and develop an average of what you have spent by category
and let this be a guide for your future spending. Decide that you either agree
with or want to change your spending habits.
You must allocate all
of your income. The difference between your income and expenses should be zero,
yes zero.
If the amount is positive and not zero, you must go back
and allocate that money, tell it where it should go.
However, if the
difference is negative, then you will need to reduce expenses until the amount
is equal to zero, and/or my favorite solution, go make more money. (See related
articles- 25 Money Saving Tips and articles relating to Making More Money)
What you are doing here is getting to your bottom line. This is
your path to new money.
Ready GO!
For free financial tools to
help put you on the path to successful planning,
click here >>
<< Back to Article Index
|
|
|
| |
|
|
|
