By: Samantha Purcell-Musgrave
At the end of every year, do you find yourself wondering where your all of your money has gone? Of course, there are those monthly expenses, like bills, grocery shopping, etc. So after those are taken care of, where do the excess funds go? The best way to find out is to start your finances off right at the beginning of the year! To get the ball rolling, follow some of these strategies:
Figure Out Your Finances
You can’t get too far without knowing what you actually have and what you owe. A great way to do this is to sit down and look at your assets, what you actually own, and your liabilities, what you owe. By figuring out your estimated net worth, or the sum of all of your assets, you can figure out how to effectively balance your liabilities. Now, if your net worth is more than your liabilities, you are in the clear or at least you aren’t in the negative. However, if your net worth is less than your liabilities, you may want to take another look at your spending habits because you will be in the red.
It may seem daunting at first. To make it a little easier, here is a worksheet created by the U.S. Securities and Exchange Commission (SEC) to help figure out your net worth. To keep the ball rolling, use SEC’s monthly income and expenses worksheet. So, when the end of the year rolls around, you aren’t stuck in the same boat wondering where all of your money went!
The Big D
Debt. Everyone has it and everyone hates it. Once it’s there, it’s there for good and you can’t run from it forever. The best way to handle your debt is to create a plan no matter how much you have. If this seems overwhelming, try spreading it out over several days. This can also help in making sure that you have all of your debt accounted for. Once you have everything compiled, make sure it is organized. For instance, if you have 4 credit cards, 2 from company A and 2 from company B, make sure that you make that distinction when making a record of your credit card debt. Make it clear that you owe x-amount to company A and x-amount to company B.
Now, it’s time to make the debt, or repayment, plan. Some tips that Wells Fargo has for creating a repayment plan can be found here.
Making a Budget
This is probably the hardest part, both to create and to stick to. There is always seems to be several heavy hitters throughout the year. Then, we tend to treat ourselves even when we really don’t have the money for it. However, you would be surprised the effect that having a budget has. Even with those heavy hitters, you will still have the ability to see your current financial situation and an idea of your future financial situation.
First step, you have to keep track of your daily spending habits. This can be done on scratch paper, notes in your phone, or whatever you find convenient. Then, project next month’s expenses and income. Now, you can use the list to see where you can cut certain expenses, or find cheaper options, in order to save some money. You would be surprised how savings here and there can add up over the year. Check out this personal budget spreadsheet created by Bank of America to help get you started.
There are hundreds of way to save money in your daily life. However, you have to establish a foundation for your finances and understand that foundation before you can go about saving your finances. A quick google search of how to save money will give you tons of great tips and tricks once you’re ready. Personally, my next money saving goal is complete the “52 Week Saving Challenge”. Comment and let us know how you plan to save money this year!
Image courtesy of David Castillo Dominici/freedigitalphotos.net
Samantha Purcell-Musgrave is a Junior at the University of Central Florida. She is currently studying Health Services Administration and Journalism. She would like to one day become the CEO of a hospital. Once she achieves that goal, she would like to be a writer for a music magazine. Overall, Samantha would like to help foster the growth of a company into something bigger than itself. During her downtime, she likes to go to musical theater, concerts and operas. She also likes to travel, take photographs, write and spend time with her friends and family.