I get to dive into a fun topic today. Actually, it's more of a stressful topic. Managing finances. I like money. Money is good. But it doesn't grow on trees, and sometimes we can't seem to make enough of it. As I have mentioned in my last few posts, I have learned how to manage small incomes and stretch my dollars. It's not easy. It wasn't easy at 15, and it still isn't.
When you want to manage your finances, you must start by defining your wants and needs. For me, some of my needs are clothes, food, a roof over my head and a car to get to work. Some of my wants right now would include things like a work desk for my room, a bookshelf, an e-reader (yes, I did say that!), a new wardrobe, etc. For others it may be an iPhone, tablets, gaming systems, a dream house, etc.
Sometimes wants and needs become confused. Many people think they "need" a cell phone. I don't. But I have wants that I think are needs and I get frustrated about things I can't reasonably afford. Sometimes I have to go to certain work events and I feel like I don't have the right professional clothes, accessories or shoes, but I can't go to the mall and fluff up my wardrobe (although I do hope to do so Boxing Week). As I write this, I'm going to a 50s themed youth banquet in a week and I have no dress to wear. I'm frustrated because I don't want to be different, but it's currently not reasonable for me to spend a lot of money on an outfit for one evening. Some mornings there's nothing good in the fridge to take to work, but I know I can't buy lunch all the time, so I make a sandwich.
Managing my finances means discipline. It means denying myself a lot of things. It means making sure my bills are paid before I get my wants. It means making a sandwich instead of buying lunch, making coffee at home instead of stopping at Tim Horton's, and not buying the top I really want because it's so overpriced.
Here's what I do to help me manage my finances. Every month, I collect all my receipts, or I write down money I spend that I don't have receipts for. At the end of the month, I sit down and put all my income and spending into an Excel spreadsheet. I divide things up between my regular expenses (insurance, rent, fuel, tithe/donations, Internet, etc.), car maintenance, health expenses, groceries, eating out/snack food, clothing, books (that used to be a big one,) recreation/entertainment, etc. Then I total each section, my income, expenses, calculate what's left over at the end of the month and hope it's not in the red.
Before I started doing this, I had no idea how much money I was spending on little things, like coffee or occasional lunches. It helped me to see where I needed to make adjustments and what I should be reasonably spending in a month. I could also see how much of my income was needed to pay necessary expenses. This was an excellent tool when I was considering financing a car earlier this year. I had a one year track record of my income and spending that helped me evaluate whether or not I could reasonably afford a car payment.
I would also encourage you to get a savings account where a sum of money automatically goes into every month, and then don't touch until you really need it, or save it for a car, house, education, wedding, or whatever. If need be, make an account that you can't withdraw from without calling in and requesting a transfer. Also, use your credit cards wisely. I'm not trumping credit cards. I use mine all the time to save on service charges and occasionally for online purchases. But remember it's not actually paid for when you swipe the card. Don't use your credit card unless there's money in your chequing account to pay for it, and make sure you pay your bills on time.
Finally, live debt free as far as possible. Don't finance anything that depreciates. Houses are the exception. If you can't write the cheque, don't buy it. OWN your stuff. This is something I have been very stubborn about, and I'm happy for it. I've seen the burden debt leaves on people and don't want that hanging over my head.
I know this has probably been a bit to digest, but if you learn to manage your finances and budget your spending, I don't think you'll regret it. Yes, it's hard. But that's life. If you don't learn to manage your income now when you have yourself to look after, how much harder won't it be when you have a family to look after? And again, if you manage your money wisely while you're single, I think you will appreciate what your husband will one day do in providing for your family much more.
Next Post: Meet a Need