Finances, finances. So many people don’t get them — nor do they want to. They’re HARD. There’s too much else going on to worry about something as abstract as finance.
The problem with this: if you don’t worry about “that stuff,” you’ll never have any of “that stuff” to worry about.
When we’re young, we know one time frame: NOW. As we grow older, now becomes too busy to stop for. There are, instead, families to deal with, children to raise, and jobs to complain about.
When the time comes that we need that extra money, when we’re no longer working as much, when we’re fighting to pay each bill and keep our heads above water, there’s no more time to save.
But finances don’t have to be that hard. They’re not the ghosts in your closet. They’re not the monsters under your bed. Finances are input vs. output, plain and simple.
Once you simplify finances down to a concrete concept and some simple processes, you’ll become their master, and you’ll set yourself up for financial success.
Though it’s not simply a matter of knowing what’s earned versus what’s being spent, you do have to start with those simple numbers before moving forward.
Add up all you have coming in each month, taking into consideration your income, alimony, child support, etc. That’s your input.
Add up all your expenses each month. Don’t forget a quarterly amount for clothes, car repairs, home repairs, savings, etc. You’ll have to estimate some of these numbers, so just do the best you can. The total of these amounts is your output.
Subtract your output from your input; this number is how much you have left over to “play with.” That amount is all you have to use for entertainment or to tuck away as extra savings.
But, let’s make it a little easier still.
7 Steps to No-Brainer Finances
• Pare down your credit cards.
Use no more than two credit cards that you pay off as soon as you use them. (You want at least two so you can maintain a good credit score.) Chop up all the others. And if you owe on other cards, be sure to calculate them into your monthly output.
• Automate everything.
Schedule your bill-paying online, and you’ll stop paying fees for late payments. (Make sure you keep enough cash in your account to cover those automatic payments, though!)
• Save regularly.
When you’re calculating your output, calculate an amount to put into savings, too. A great way to save as much as possible is to have your check direct-deposited into your savings account, then have the amount you need for bills automatically transferred to your checking account.
•Use only one bank.
Get simple: diversifying your wealth does not apply here. Go with a bigger bank that will cover all of your needs. By lumping all your assets into one place, you become a bigger customer, which will earn you more perks and better service.
• Invest in a mutual fund.
Start your retirement savings by investing in a mutual fund that’ll pay out when you’re 65 or 70. Be on the lookout for hidden fees when you’re shopping around. Again, set this up to be automatically invested when you get paid — and it’s out of your head.
• Link your checking and savings accounts.
With all these automatic payments, the likelihood of overdrafting increases. When you link these two accounts, you’ll prevent this, as well as any fees.
• Open a second checking account.
If you want to be sure you don’t accidentally touch that bill-pay money, get a separate checking account. Once you’ve deposited your whole cheque into your savings account, have a fixed amount to cover your bills transferred to one account (the bill account) and your play money to the other (the play account).
This is where your math from earlier comes in. You know about how much you have to play with, so that’s what you send to the play account — and only that. If you need more, live lean and learn how to get by without it.
Finance is hard, but not impossible. By following these steps, you’ll make it easy.