A penny saved is a penny earned

I am so far from a financial expert it is not even funny, but I have learned a thing or two about managing money from my own huge mistakes, and my tight wad husband.

Organizing your finances is a lot like organizing your home, I’d even say the two go hand in hand.  Being disorganized financially costs you extra money and leads to unnecessary stress, just like an unorganized home.

The steps to get your finances in order are also similar to the steps you take to organize your space.

Step one. Get real about your money. Go through your last 3 months bank statements and credit statements and highlight all home expenses one colour, and all personal another. Now add up all home and all personal separately.  You can’t make a realistic budget without first seeing how you really spend money.  Home stuff includes groceries, phone, cable, rent or mortgage etc.  Personal includes clothing purchases, salon and spa, fast food and restaurants etc.    

Step two.  Make a budget.  I will attach a sample budget for you. First put your REAL numbers in! Take an average of the last three months and enter this number into the budget. I know, it’s a pain in the ass, but no pain, no financial gain!  Now that you have your REAL budget, you can see how much money you are completely wasting on useless crap! If your budget balances, good for you! If you’re in the red, odds are you have been using credit each month to make up the difference and you need to start crunching numbers and find a way to balance your budget.

 Step Three. Save, Save, Save. Now you need to start putting money away. Can’t find it in your budget? Bullshit. Trust me when I say, your retirement savings and emergency fund are MUST HAVES, even if your are young, while cable, clothing, fast food, alcohol, books and magazines are NICE TO HAVES. Here comes more super fun number crunching. You need to PAY YOURSELF FIRST!!! What this basically means is, setup an automatic transfer from your bank account to your savings account THE DAY YOU GET PAID. That way you only have what is left over to spend and when it is gone, it’s gone. Basic rule of thumb is 10% of your net income should go away for retirement and you should have a separate emergency fund to cover at least 3 months lost income.

K. So now let’s talk catch up. Let’s say you have no savings and you have a lot of debt. Your priorities are going to be a bit different until you catch up. It’s going to be hard and it’s going to suck, but it’s now or never. Time to suck it up and put on your big girl/boy pants.

If you have a lot of consumer debt, let’s be honest…you’re being irresponsible and spoiled.  I don’t know you, so I’m not going to sugar coat this. If you have to put something on credit card because you don’t have the money, you don’t need it that bad and you shouldn’t buy it. You’re being a spoiled two-year old and you need to put yourself in time-out.  Credit cards should be paid off in full each month, not just the minimum balance. If you don’t have the money in the bank to buy it, you sure as hell can’t afford the 20 % interest they are charging you……

K. So, if you have consumer debt, pay that off first before you save for retirement….pay as much as you can each month to pay it off.  This may mean you need to remove most or all of your “NICE TO HAVES” from your budget. Don’t give me that look, you were bad and now you need to ground yourself.  You still need to have an emergency fund though, budget a few hundred dollars each month until you get a couple thousand saved….don’t touch it!  Once you have a few thousand saved, start putting that couple hundred on your debt.

I know I sound like a pretentious bitch, but I’ve been there are I know how much better it is on the other side! I still spend waayyyy more then I should on useless crap, but I also follow some basic rules so my spending problems don’t hurt my family…too much. I pay myself first and put 10% away every pay. I have a credit card with only a $1000 limit and I try to pay it off every month.  I NEVER buy anything “buy now, pay later”…biggest scam ever. If I can’t afford something, I don’t get it. If something we own breaks, we replace it with our emergency fund money and then work hard to put that money back in the fund ASAP…..There are weeks where I have gone crazy and spent too much on tutu’s and kids toys….then I pay for it by eating KD and hotdogs and going without other things for a few weeks.  Am I good with money? HELL NO! Are my finances organized? HELL YEAH!  Click HERE for a sample budget.

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