Can You See The Forest Through The Trees?

 In the last few weeks, I’ve had the opportunity to speak in front of a handful of audiences mostly made up of women. In reviewing the evaluations, the comments written at the bottom of the page were all somewhat related. Essentially they said, “I didn’t know a simple change could have such a big impact. I don’t know why I don’t do this already!” That’s when it dawned on me that many of us are so busy we don’t have time to think - quite literally.

Managing our money does take some time, but it doesn’t have to take an entire day. Nor does it have to take many hours if we create a simple routine to address our specific needs.

The benefits to creating such a routine are at a minimum, threefold:

• You actually know how much money you have
• You know how much your lifestyle is costing you
• You spend more efficiently when you have a handle on what expenditures you value and which ones you don’t, subsequently eliminating waste and boosting your cash and savings balances

Today I’m going to share with you three suggestions I made to my audiences that resonated the most with them. Hopefully they will resonate with you as well.

1. Include your “annual bills” in your monthly budget. This sounds like a no-brainer, but I was amazed how many folks received this as “new” information. Insurance premiums for your auto, home, medical, life, long-term care, and disability, etc. are significantly less if you pay annually instead of monthly. You can throw property taxes in there, too, if you’re a homeowner. Simply divide the annual amount by 12. Each month, set those amounts of money aside in your savings account and earmark them for a particular expenditure. When the annual bills come, simply transfer the amount needed out of savings into your checking and pay the bills. You’ve just saved 10-20% by paying once instead of monthly.
2. Use a Quicken, Money, or an excel spreadsheet to track your accounts. With a few clicks you can produce extremely valuable reports such as your personal balance sheet and cash flow statement. My mother used to say, “The proof is in the pudding! ” these statements don’t lie and will give you an accurate view of your current financial standing. However, these statements are only as good as the info you enter into them, which leads to my next suggestion …
3. Schedule a time each week to enter your income and expenditures and pay your bills. Set up online banking or bill-pay with your bank - it’s mostly free these days. Bills can be paid weekly in less than 5 minutes. Your banking transactions can be downloaded from your bank’s site into your software on a weekly basis which will enable you to reconcile your monthly statement when it arrives in a matter of minutes.

Once you establish your routine, you will find that it only takes about 15 minutes a week for you to accomplish all the above. On a monthly basis, you can print out a report so you know exactly where you stand each month and can see your progress. These three steps will provide powerful knowledge that you can apply to modifying your habits for better outcomes. Wouldn’t you like to create more money by applying your knowledge for positive change as opposed to wandering around the “forest” of ignorance? I thought so!

© 2010 Start Smart Advisor™, Inc.