Take Control of Your Finances
- May 5, 2017
By: Michele Thompson
Managing Your Money.
I believe with everything within me that your most potent asset-building tool is your income. Ideas, strategies, goals, visions, focus, and even creative thinking are hugely important, but unless you take control of your finances and have full use of your income to create your wealth, you will not build and maintain it. To build wealth, you will have to regain control of your income.
When we fail to plan, we plan to fail, and so there is always too much of the month left at the end of the money. Everyone needs a written budget.
Sometimes I hear, “Well, I kinda, sorta know where my money is, ya know. I know what it is going to, ya know. I do my planning in my mind, ya know.” Having a written plan is necessary. Kinda, sorta knowing what’s going on with your money is going to kinda sorta get you to your goals. Developing a written plan gathers, organizes, categorizes and analyzes information about your money situation. As you do your written plan, you will be amazed that answers to money problems will appear easily.
Set up a new written budget every month. At first, it may take a while, but the process will get faster. My wife, Sharon, and I used to spend hours on our budget, and now we only spend a few minutes each month. There is no perfect budget; there are no perfect months, don’t try to plot it out because that just does not work out.
If you can see it, you can work with it. Spend every penny on paper first, before the month starts. Give each dollar of your income a name before the month starts—that’s called a zero-based budget. Income minus outgo equals zero every month. Look at this month’s income and this month’s bills, savings and debts, and match them up until you have given every income dollar an outgo name.
Every dollar of your money should fit in a category, even if you need to make up new ones. The basic categories include saving, housing, utilities, food, transportation, medical, personal, recreation, and debt. Don’t forget to include saving for things that aren’t monthly, such as Christmas, birthdays, taxes and insurance premiums.
Even those who earn commissions, self-employment or bonuses, must still do a written budget before each month begins. In your case, adding up what your outgo is each month is a form of goal-setting. It tells you what you have to earn to cover all the outgo you will have. Prioritize your bills, savings, and debts in order of importance, not urgency. Ask yourself, “If I only have enough money to pay one thing, what would that be?” Move this way through the list. Stick to it! As the income comes in, work your way down this list.
It can take a couple of months maybe even three so before your budget is on point, but keep trying. This is key to your financial success.
Michele Y. Thompson is an author, contributing writer on MyStock911 and MortgageExpertGuide , commercial mortgage broker, entrepreneur, and finance coach. The culmination of her work in mortgage banker finance, global investor services, real estate, and debt consulting; along with her advanced degrees has driven her to help new and existing businesses reach their goals for over 20 years.