Day#24: Write down your ideal income and expenses.

This is Day #24 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the final installment of this series, which will be up tomorrow. Here’s today’s installment:

In the income and expenses spreadsheet I use (which I also refer to as my budgeting spreadsheet, though that’s inaccurate), I include an extra sheet titled “Ideal”. This sheet contains my ideal expenses and income. While you don’t need to use a spreadsheet, I think it’s important that we all have a written record of our ideal income and expenses somewhere.

Today’s Task: Write down your ideal income and expenses.

The first thing to do is to grab a sheet of paper (or create a new document in your computer) and write down your ideal income. It’s not enough to write the amount itself, also note where the money will be coming from. How much will come from your job? A side business? Investments?

Read more..

Day#23: Do a financial review of your year so far.

This is Day #23 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

It’s nearing the end of 2009 so it’s just the right time to look back on the past year and review our experiences – whether they are positive or negative.

Today’s Task: Do a financial review of your year so far.

Collect your documents. These would be your latest bank and credit card statements, payslips, and other documents that are relevant to your finances. If you have a budget notebook or spreadsheet, take those out too.

Get a pen and paper or open a new document in your computer. You’ll need to write down your financial review so that it’s concrete, and you can review it next year to see how well you’ve improved.

Note the following information:

• Debt status. If you currently have outstanding loans and debt, look at your most recent statements and see how much you still owe. How much longer do you need to repay all your debt?
• Income. How much gross income did you earn this year? How much is it after deducting taxes? Apart from the pay you get from your regular job, don’t forget to include any subsidiary income you received such as money from side gigs, selling, or investments.
• Savings. Look at the statements from your savings accounts. How much did you end up with this 2009? How are you allocating these savings? (In other words, how much is for your emergency fund, retirement, or other items?)
• Spending. If you collect detailed expenses like I do, look back at all the information you gathered last year. What major expenses could’ve been avoided? Where did you succeed in minimizing expenses?
• Investments. If you invest any money in bonds, stocks, mutual funds, or businesses, how did your investments do by the end of this year?

Your financial review can be as simple or as detailed as you want. You don’t need to jot down your month-by-month activity if you don’t have to. Just start with the basics above, and if something seems wrong or if there’s a specific part you’d want to improve for next year, that’s when you can choose to be more detailed. Also: if there are certain aspects of your finances that you’re not too proud of, don’t dwell on it! Just make an action plan to avoid making the same mistakes next year. Let’s keep this exercise positive.

Have you reviewed your 2009 finances yet? Which areas did you do well in? Which ones need more improvement?

Image by gerard79 from sxc.hu

Day#22: Discuss finances with a friend or relative.

This is Day #22 of “25 Days to Healthier Finances”, a series of blog posts where Frugal Pinoy readers and myself work on 1 task a day to make our financial lives better. Please stay tuned for the next installment of this series, which will be up tomorrow. Here’s today’s installment:

For most people, it’s taboo or bad manners to talk about money. But sometimes, not discussing money properly leads to even deeper problems. For example, married couples often disagree on their financial status. In one survey, 86% of couples admitted that they regularly fought over money. Another survey revealed that more than 2/3 of Americans learn about money management from home rather than school. Whether we like it or not, discussing money with others has a significant impact on how we perceive or handle it.

Today’s Task: Discuss finances with a friend or relative.

Your discussion doesn’t have to be deep or complex. Here are some examples of some simple starting points:

• Ask an older relative what they wish they started saving up on when they were your age.
• Give your kids glass jars where they can collect loose change and tell them why doing this is important.
• If you’re interested in starting your own business, you can ask advice from a friend who has done it before.
• Ask your parents what they wish their parents taught them about money.
• Go on your social networking sites (Facebook, Friendster, Multiply) and make a post about how you’re interested in learning how to manage your money, invest, or whatever aspect of personal finance you’re most interested in. Ask openly if your contacts have any books or blogs to recommend.

Of course, before you start any conversation about money, assess your relationship with the person first. How close are you? What do you expect to gain from the discussion? Have you discussed finances in the past? If you’re having trouble gauging their comfort level , keep these pointers in mind:

• People are more open to discussing things like cost of living (bills, rent, etc.) and budgeting/planning methods rather than specific price tags on purchases or how much their salary and savings are. Ask “how” rather than “how much”. “Do you know a cheaper grocery store or market nearby?” is better than “How much do you spend on groceries each month?”
• Friends and relatives in the finance sector tend to be more open about these kinds of discussions, so if you have a close friend who works in that field, talking to them is a good start.

Why is this important?

For me, talking about money – especially with my partner – is an exercise in getting real. It allows me to express and evaluate my ideas about what money is and how I treat it as a resource. Without my regular discussions with my partner, I might not be as disciplined about managing my money well. Also, doing this can be a learning experience. I have some friends that I ask financial tips and advice from. They allow me to see things in new ways that I haven’t explored before. It’s certainly much better than keeping all your thoughts and ideas inside without the input of others.

How often do you talk about money? What is your experience with talking to your spouse or parents about it?

Image by pfiesta from sxc.hu

« Previous Page