Matt’s note: This is a guest post by Walter Frick of Financial Hope Learning Services
Automatic Data Processing, Inc. revealed 20% of workers would not be able to make a mortgage, utility, or credit card payment if they missed a paycheck.
Living from one paycheck to another puts unnecessary stress into one’s life. The stress from financial problems and poor financial decisions are the leading cause for the break-up of relationships and marriages.
Everyone must realize the need to manage their money wisely. When you actively take control of your money, you will find it goes further, especially when you are trying to pay expenses.
The first step to managing money is to balance your checkbook each time you get a bank statement. Make it a point to always balance you checkbook once a month using the bank statement, or going to your bank’s website to check your balance against the checks you have written, your ATM withdrawals, and any debit card transactions. Never write a check unless you know the money is actually in your account to avoid unnecessary fees.
The next step to becoming a better manager of your money is to do a written monthly financial plan, better known as the budget. A budget is a helpful tool to plan the spending of your income. Your budget, when agreed upon and lived on by you and your family, can help you live on less than you make, and removes many of the money fights and money problems between family members. A written budget will also end the embarrassment and stress you experience when trying to decide on whether to buy food, clothing, or pay the power bill versus the mortgage.
The easiest and most powerful written financial plan is a zero-based budget. The zero-based budget is income minus expenses equals zero. A monthly zero-based budget allocates every dollar of your income to some expense category. Before each month begins, you must spend on paper your entire month’s income, thereby making spending decisions ahead of time. These spending decisions will help you to determine what is important in your household – saving, giving, or spending. Remember, each month’s income and expenses are different so plan accordingly.
Begin today to take charge of your money! Balance your checkbook, and develop a written monthly budget. By planning your monthly spending decisions ahead of time, you will find that your money will go further; you eliminate the impulse purchases that create some of your money problems, and will give you the peace of mind of knowing you are in charge of your money instead of it managing your life.
Financial Hope Learning Services
Contact Walt by email: firstname.lastname@example.org