How do we begin to
balance anything about money? By creating drafts on paper of what we spend,
what we save, what we have coming in as income and what we have going out in
bills.
By creating a paper
draft, we are able to see the accurate facts and figures of what we are
truthfully doing with our money. We must be putting every aspect of our
money in its own separate column to know our money waste and what areas of our
money we need to improve upon.
But for many of us,
we accept the stale circle of negatives of our money that impacts our life; and
do nothing. We never get ahead. We choose to stay behind. Perhaps, its low
income or high interest rates we have to pay for the credit we have. Perhaps,
it’s never getting ahead because one is always behind. By investing the time to
look in-depth on paper of where money is going and how it is being spent; we
can become uncomfortable to face the facts of what our money is doing.
Businesses use many
types of financial statements and assumptions of economy to create their profit
and loss. Businesses survive because everything is on paper, track-able, and view-able to pertinent stockholders, investors, employees, and anyone else that
has a stake in the company. Home budgets require management as strategically as
this. Why?
Because the money we
have coming into our homes should improve our quality of life and not decrease
our life with undue stress that we can prevent and control of our money. By
critiquing home budgets, as if it were a business; we can predict our cost of
living, expenses, and learn how to make something thrive less stress-fully and
with profitability. Who wants to merely pay their bills? Who wants to be able
to control their bills and budget?
Three primary “forgotten”
aspects of home budgets are not usually calculated in. Why? Lack of
knowledge. Lack of validity. Failure to know any better. Never taking a home
budget seriously. These things do happen for many different reasons to good,
honest people. Isn’t it time we quit assuming we know what we are doing with
our home budget and personal finance and act upon our responsibility toward our
money, as we would for our employers?
The three primary
elements that must be taken into separate account of home budgets are these:
1. Operating Expenses and activities that
increase or decrease income potential.
2. Investing Expenses and activities that
increase or decrease income potential.
3. Financing Expenses and activities that
increase or decrease income potential.
Operating
expenses are basically the bills we pay that keep our lights on, water on, trashing
removed, housing above our heads, and a comfortable place to increase our
quality of living. These bills can be controlled and managed by anyone who
puts forth time and effort to understand energy conservation, weatherization
investments, and having an ability of desire to compare last years’ operating
costs with this years’ totals to create plans of what can be improved upon to do
to decrease overall operating expenses. The more we know our bills and
companies services provided – the more we can learn how to control them. Not
letting them control us or our money anymore.
Compare
insurance company rates at least once a year looking for savings. Compare
activities cost of cell phone, internet, cable/TV services and other operating
expenses at least once a year to find a better value to decrease costs. Consider
if the services you receive are as important now as they were a year ago. Many
get locked into “contract” rates for some services to pay extra fees, if they
are cancelled before the contract end date. Do the math. Will you be saving
more money by cancelling services and paying these high contract fees or will
you be more by staying into the contract? Math saves money – it does not
decrease it. Do not let assumptions or fears of companies, corporations, or big
business scare you or intimidate you. Do the math. They want your business to
improve their profits. They do not care what your profits or losses are. They
only seek to increase theirs.
Investing expenses
and activities can be many different things to different people. Many
employees have opportunities to pay dues or annual fees to a non-profit
organization that seeks to improve employee development, associate growth, job
security, employee training and other additional benefits that employees view
as an investment. People who pay tithes are following their beliefs to give to
others first. People who donate to charities are doing so for tax deductions to
save money on taxes or to sincerely help others in a specific cause. However,
be careful of what you spend your money too of non-profit agencies, charities,
and these items of “goodwill” investments.
What percentages go
to the cause? What is your return of prosperity? How much funds go to helping
others and what only helps the authority in charge of the organizations? Are
you paying for their “trips, luxuries, and their wants?” Are they sending out
more money than they retain? Investing in others is a wonderful way to
spend money, but not when you cannot responsibly afford it; and not, when it
goes to cushion the head of the organizations and deprives members or its
people of genuine funds to help them.
Financing expenses
and activities can take a large part of income to comfort a lifestyle.
These financing expenses and activities can deplete income so fast that before
a person knows, they will be paying $200-$400 a month in interest fees they
cannot get back. Homes, vehicles, and student loans are the three primary
reasons many people struggle to control their income. The high finance rates of
long-term debt creates waste of money that a consumer can never get back. The
only thing a consumer can do to counteract the high interest rates for the
vehicle, home, or education they need to survive on is to create a financial
plan for these high priced items.
Before you sign on the dotted line to commit to any interest bearing
account, create a financial plan.
I.
Are
the interest rates higher than you want to pay? Is this item a “need” versus a “want?”
II.
What
are your plans for paying additional amounts toward the principle of the loan
versus making only minimal payments? The contract states five years to pay off.
III.
Can
you afford to pay off in three years or refinance in a year by ensuring you can
create an excellent payment history in a year?
IV.
Have
you researched the internet for problem solving tactics to decrease interest
and the life of the loan before signing?
Financing is what
turns the wheels of business forward in America daily.
It is not just
private citizens who finances. Businesses also do it every day. However, the
differences between managing a home budget and a business budget is means of
opportunities to get help based upon creditably and validity.
Consumers should be just as determined to use their income
of home budgets in the same manner. To make smarter and wiser financial choices
and to problem solve their money situations; don’t ignore them or just complain
about them to do nothing.
Many financial managers of business spend hours, years, and endure many
trials and errors to learn about money control, create financial wise plans,
and to control money. We should be as diligent in our home budgets.
If our home budget of
profits and losses were put on a balance sheet, would we balance? Would we
be more negative than positive in our ability to control our money? Would our
annual income spent show that we controlled our expenses, increased our
investments, and decreased our financing expenses?
Home budgets take
first priority when controlling money. When we fail to take responsibility of
our income, our income takes control of us. This is a personal problem that
must be addressed.
This is hard. Money
choices always are. However, the hardest lessons ever learned in life that
carry the most value are those choices we make to do the right thing, at the
right time; the first time.
Consider spending
quality time daily to learn about your money situation. Stop viewing your
negatives and learn how to turn them into money positives. No one can understand
your money situations, but you. Only you can choose what you will learn to help
your life. No one else can.
