Things are looking bad. Every turn you make with your accounts erupts in problems, and overdrafts. There is no feeling like failing financially. There are few things more burdensome. But there is hope, and the answer isn’t to make more money. The answer lies in understanding a few financial principles well, and executing them well. After facing an unfortunate situation, I had to take advice from a forensic accountant from Forthsonline.co.uk.
I will be sharing some advice I was given, and before starting you all need to address these problems and answer them honestly.
What Do I Make?
Salaried, hourly, retired, or unpredictable, you can create a budget. Step one is to get a clear, and realistic idea of your income. Take the six paychecks. Add the net amount (amount after taxes), divide the total by six, and that number is the average paycheck amount over one quarter (assuming you are paid twice per month).
That number is going to be your base number.
What Are My Expenses?
Get out the bills because it’s time to face them. Write down what they are, what the monthly payment is, and the total amount owed. Include the website, user name, and password hints for each account if the account is paid online. Finally, write down when each payment is due.
Add up each payment to get the total expenses for the month. Deduct that total from your income total, or base number for the month.
How are you doing? Don’t panic! You will get this under control. Various budget applications are available where you can get a monthly plan and sort of your finances. IReconcile has received good ranking and is recommended for people looking to budget in an organized manner.
The Important Thing
Taking the time to make a budget is the first, and most important step in getting your finances under control. If you are not doing well, do not waste energy beating yourself up. Commit!
Identify when each bill is due during the month. Divide the month in half. Which payments are due the first 15 days? Total them up. Deduct that total from the first paycheck. How are your finances doing? Do the same thing for the second half of the month. How is that doing? If it averages out between the first and second paycheck, that’s good.
Some bills come heavy on one side of the month. Fortunately there are many companies who will work with you on due dates.
Due dates can be changed on almost any line of credit, and on your cell phone bill. Get in control. Things will change.
Make a Plan
There is now a clear picture of where your finances are – don’t obsess about where the budget is now, envision where you want it to be in the future. You’re just getting started.
Here is where discipline comes in. You must make a schedule for yourself. The smart thing to do is pay your bills first, then take what’s left over and live. For a while you will be doing just that – living. That’s okay, because within a few months you will notice a drastic change. That sinking feeling will be alleviated.
Schedule your payments, and meet every one. If you have to start paying the minimum, that is fine. However, know that paying a few dollars more has dramatic effects in the long run.
In the near future you will have paid something off! Good job! Take that payment amount, and add it to another payment. Soon that payment will disappear. Take the totals of the two payments, and put them on a third. Goodbye payments!
Now you are moving. The sun is brighter, the air is crisp, and the panic has left you. This process will change your life. So much depends on money in, and more importantly, on money out. It will be a relief to know that you are in control.
About the author: After benefiting from the help of a forensic accountant, Ted Hansen decided to share his thoughts and experiences about managing finances. He hopes to enrich the lives of his readers with ideas on how to secure their businesses and families.
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