Automatic Plan. So you have to start somewhere, no it doesn't instantly make you rich, but it can in the long run.
You need to know exactly how much is coming in and more importantly in Step 1 is Going Out. For some people it is easy, they use online banking so they can take a look at the last 3 months of transactions and get a great idea of what they are spending. Even download it to Mint.com, Excel spreadsheet(personal favorite) or whatever financial software or online tool you use to figure if your money is going towards groceries or new clothes. Just remember to make sure you keep an eye out for ATM and Bank withdrawals, chances are you don't remember where that $60 went on Friday night after work, well maybe you do, but you have chosen to suppress that memory of buying everyone you recognized a "Happy Friday Cocktail".
|By my calculations this is f***ing impossible. It's not this is a weather spreadsheet, let's just do plus and minus today.|
So you have some tools that you can use, but being old fashioned in this case works as well. Save all your receipts for 30 days, every receipt, write it down because it matters. Buy a special notebook to keep track of everything, don't forget you need a receipt for that.
OK great you have written down everything that is going out, Congratulations!!! I mean it, this was so tough for me. I knew I was spending to much, I didn't want to admit it, but when I looked at the numbers I knew something had to happen. Well almost done with Step 1, we just have to figure out how much is coming in, should be pretty easy take your last month's paychecks that are for normal hours and add them up. Easy to say if you are working a 9-5 for a company, if you are Self-Employed take whatever you pay yourself in a given month and if you don't do this do it now give yourself a salary.
So by my calculations all we have to do is take What's Coming In (Minus) What's Going Out=What We Have Left. Seems simple enough, just have to sit down, take some time and figure these numbers out. I know it seems like this isn't that important, but we are building a house and we need a foundation, no cracks in this fine looking base(Slapping the Base reference here). Also I don't care if your number is negative $4,000, negative $40, or positive $400, we really are looking for our base number something that we can use for that fine looking base.
- Figure out Where all of your Money is Going
- Make things Automatic-Debt, Savings, and Investments
- Make paying off Credit Cards a Priority
- Add additional payments to the Debt you like the least
- Pay off home early
- Make sure you and your loved ones are taken care of
- Build wealth and give!