Do you find yourself with too much month at the end of your money? Would you like to “Pay Yourself First” but haven’t figured how? Would you like to S-T-R-E-T-C-H your paycheck or income? If you answered “Yes” to any of these questions, the good news is that it will only take you half an hour to start feeling financially fit. Isn’t that time worth it to get out of debt, build your savings or save more for your retirement? Fulfilling many of your financial goals is within your reach – or at least your personal spending. You can control every penny that you spend; while it is much more difficult to increase your income. There is money to be found in every spending plan, which is the foundation of our financial health. To uncover that found money, complete the following exercises – especially the first! It should take no more than half an hour. You will find that once you accomplish these exercises, you will breathe a sigh of relief and have the energy to tackle the rest of your finances!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Found Money
Do you find yourself with too much month at the end of your money? Would you like to “Pay Yourself First” but haven’t figured how? Would you like to S-T-R-E-T-C-H your paycheck or income? If you answered “Yes” to any of these questions, the good news is that it will only take you half an hour to start feeling financially fit. Isn’t that time worth it to get out of debt, build your savings or save more for your retirement? Fulfilling many of your financial goals is within your reach – or at least your personal spending. You can control every penny that you spend; while it is much more difficult to increase your income. There is money to be found in every spending plan, which is the foundation of our financial health. To uncover that found money, complete the following exercises – especially the first! It should take no more than half an hour. You will find that once you accomplish these exercises, you will breathe a sigh of relief and have the energy to tackle the rest of your finances!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Jot Down Every Dollar Detail
On a sheet of paper, write down everything you spend for the month. The goal is to come up with one monthly number that reflects all your spending (i.e. to walk out your door, it costs $3,000 per month). While this sounds simple, there are two areas that most people forget: annual expenses and small purchases. Annual expenses that are usually forgotten include: vacation, insurance, holiday gifts, professional services, school, medical expenses, clothing purchases, taxes and charitable contributions.
Then take this number and divide it by 12 to figure out how much this adds to your monthly expenses. You might spend $1,000 a year on clothing for your family; therefore, add $83.33 to your monthly expenses. Now tackle the small purchases, such as all food and meals. Perhaps you buy a $3 coffee daily. That equals $60 per month ($3 X 5 times/week X 4 weeks). Don’t forget about clothing, taxis/transportation, gifts, personal beauty, books, CDs and magazines/newspapers. Once you have that monthly number, see how it compares to your income.
Five Places to Plug
Now comes the fun part. Find five places to plug in your monthly spending. Don’t eliminate, just prioritize. Set a spending limit for what you really want to buy. If you love to shop and are spending $200 per month on clothing, lower it to $100 per month. Therefore, you are not depriving yourself, but you now have a set amount that you can spend everything month. By finding five places to plug in your budget, you can squeeze out at least $100 - $300 extra per month from your spending – if not more.
What to Do with the Found Money?
Now that you have your “Found Money”, what should you do with it? Divide that amount into the following categories:
• Debt
• Savings
• Retirement Savings
• Other (children’s college savings)
If you have debt, most of your Found Money should go towards your debt, but you should still save some money every month. If you are debt-free, make sure you have an emergency savings account and a retirement account as well. Next: saving without thinking.
Make it Automatic
Setup an automatic savings account. Most great savers do not think about saving, it is done automatically. Ask your bank to automatically transfer a set dollar amount from your checking account to a money market account. For example, on the 15th of every month, they will transfer $50 to a money market account. This money can be used for your emergency savings or holiday gifts. Check out www.bankrate.com for a higher interest rate money market in your area. You can still link it to your checking account and get that money out automatically.
Still worried about finding that extra money? Don’t fret, just take ½ hour from your schedule this week and get started. Enlist a friend and do it together over a cup of coffee. Call your sister and do it together over the phone. Make it a priority and get ready to start sleeping better at night once you do!
Interpreting Your Brokerage Statements
I hear over and over - "I don't even open my brokerage statements" or "I let them pile up in a big shopping bag." When some clients come to see me, they just bring their bank and brokerage statements in the envelope - unopened! While I definitely suggest opening your statements, I realize that they can be overwhelming and difficult to read. I have come up with a short exercise you can do to better interpret your brokerage statements and gauge how you really are performing. Just because the numbers are going down, doesn't mean that you are doing so terrible!
This exercise should take you 15 minutes but will buy you many evenings and hours of restful sleep. Isn't 15 minutes worth peace of mind? I think so! You will be doing this exercise on your most recent statement. This can be your 401k, IRA or regular investments. Once you are done, keep it in a file or folder so you can refer to it.
1) Write the price of the stock or mutual fund when you bought it or total dollar amount it cost you. Also, list the date. Some statements list it but many don't.
2) Look at your mutual funds, stocks and bonds and categorize which investment type they are. Are they small-cap growth or large-cap value? This is very important for figuring out your asset allocation. Do you have too much in one investment type ("I didn't realize I had 80% of my portfolio in Large-Cap Growth!")?
3) Instead of thinking "I'm losing so much money!" do a quick analysis and compare yourself to the market. You can do this on www.morningstar.com for your mutual funds. Plug in the ticker to get the Quicktake report. Then look at the performance chart, where it says +/- cat and +/- index. This tells you if your mutual fund is over or under performing similar funds and a comparative index. If you are doing better than the average or comparative funds, you can breathe a sigh of relief. Write + or - if you are performing worse than the market or better. Also, take this time to write how many Morningstar stars your mutual funds merit (1 through 5 with 5 being the highest rating).
4) How much are you earning on your money market at your bank or brokerage account? While it is probably earning a very low interest rate, you could earn more. Check out www.bankrate.com for a higher interest paying money market or look for an Ultra Short-Term Bonds mutual fund elsewhere.
This exercise should take you 15 minutes but will buy you many evenings and hours of restful sleep. Isn't 15 minutes worth peace of mind? I think so! You will be doing this exercise on your most recent statement. This can be your 401k, IRA or regular investments. Once you are done, keep it in a file or folder so you can refer to it.
1) Write the price of the stock or mutual fund when you bought it or total dollar amount it cost you. Also, list the date. Some statements list it but many don't.
2) Look at your mutual funds, stocks and bonds and categorize which investment type they are. Are they small-cap growth or large-cap value? This is very important for figuring out your asset allocation. Do you have too much in one investment type ("I didn't realize I had 80% of my portfolio in Large-Cap Growth!")?
3) Instead of thinking "I'm losing so much money!" do a quick analysis and compare yourself to the market. You can do this on www.morningstar.com for your mutual funds. Plug in the ticker to get the Quicktake report. Then look at the performance chart, where it says +/- cat and +/- index. This tells you if your mutual fund is over or under performing similar funds and a comparative index. If you are doing better than the average or comparative funds, you can breathe a sigh of relief. Write + or - if you are performing worse than the market or better. Also, take this time to write how many Morningstar stars your mutual funds merit (1 through 5 with 5 being the highest rating).
4) How much are you earning on your money market at your bank or brokerage account? While it is probably earning a very low interest rate, you could earn more. Check out www.bankrate.com for a higher interest paying money market or look for an Ultra Short-Term Bonds mutual fund elsewhere.
Subscribe to:
Posts (Atom)
Posts
