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Do You Have a Spending Plan?
If you've answered no, might I suggest that you take a few minutes to put one together? A spending plan doesn't have to be complicated; it can be a simple, one page document outlining your incomings and your outgoings - in other words, a budget!
Don't be put off by the ‘B word; recognise that having a plan is a responsible financial move, putting you on the road to financial freedom. Before you create your spending plan, keep a record of your spending habits for a couple of weeks, even a month. Seeing exactly where your money goes will help you to create an accurate spending plan.
Use the Cheapskates Spending Record to keep track of your spending.
Take a piece of paper and make 3 columns: Income, Expense, Total. Then under the Income column, list all your income: wages, bonuses, interest, Family Allowance Payments etc.
Under the Expense column list all your expenses: savings, rent/mortgage, loans, utilities, car expenses, school fees, medical expenses, food, entertainment, childcare etc. Be sure to include home, contents, motor vehicle and life insurances as expenses these are necessary. One tragic accident could wipe you and your family out completely.
Now take your outgoings away from your incomings this is the amount you can save without making any changes to your spending habits.
Obviously, if your outgoings are more than your incomings, then you need to either trim the outgoings or increase the incomings. You can trim the outgoings by cutting back on variable expenses such as food (by far the easiest category to trim), entertainment, utilities etc. Eat at home rather than eating out, rent the DVD instead of going to the cinema, carpool to work, take your lunch to work, walk the dog rather than go to the gym etc. You can increase your income by getting another job, asking for a pay rise or even finding a job with a better salary.
You'll notice that I put savings as the first expense. I firmly believe in paying yourself first if you really want financial freedom. Saving just 10% of your take home pay regularly will quickly build to a sizeable sum that you can then invest to create even more wealth.
Once you have determined how much you can save each pay, make it permanent. Have it automatically credited to a separate savings account as soon as your pay is deposited into your bank account/ You don't miss what you ve never had and you won't be tempted to spend it if you don't see it.
Don't be put off by the ‘B word; recognise that having a plan is a responsible financial move, putting you on the road to financial freedom. Before you create your spending plan, keep a record of your spending habits for a couple of weeks, even a month. Seeing exactly where your money goes will help you to create an accurate spending plan.
Use the Cheapskates Spending Record to keep track of your spending.
Take a piece of paper and make 3 columns: Income, Expense, Total. Then under the Income column, list all your income: wages, bonuses, interest, Family Allowance Payments etc.
Under the Expense column list all your expenses: savings, rent/mortgage, loans, utilities, car expenses, school fees, medical expenses, food, entertainment, childcare etc. Be sure to include home, contents, motor vehicle and life insurances as expenses these are necessary. One tragic accident could wipe you and your family out completely.
Now take your outgoings away from your incomings this is the amount you can save without making any changes to your spending habits.
Obviously, if your outgoings are more than your incomings, then you need to either trim the outgoings or increase the incomings. You can trim the outgoings by cutting back on variable expenses such as food (by far the easiest category to trim), entertainment, utilities etc. Eat at home rather than eating out, rent the DVD instead of going to the cinema, carpool to work, take your lunch to work, walk the dog rather than go to the gym etc. You can increase your income by getting another job, asking for a pay rise or even finding a job with a better salary.
You'll notice that I put savings as the first expense. I firmly believe in paying yourself first if you really want financial freedom. Saving just 10% of your take home pay regularly will quickly build to a sizeable sum that you can then invest to create even more wealth.
Once you have determined how much you can save each pay, make it permanent. Have it automatically credited to a separate savings account as soon as your pay is deposited into your bank account/ You don't miss what you ve never had and you won't be tempted to spend it if you don't see it.
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