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All Things Money

Posted on 18 July 2010

All Things Money

I think for many people, money can be a charged subject.

Just start asking yourself questions like:

  • How do I feel about rich people?
  • How do I feel about the statement “Getting Rich?”
  • How easy is it for me to sit down and really get into the nitty gritty of how much you are spending?

The First step to getting comfortable with Organizing your Finances and All things money is actually getting comfortable with money.

How do you do that? You start by:

  • Noticing how the topic of Money makes you feel. You can’t get rich or increase your income or even take on the task of organizing your finances unless you become very clear about your emotions about Money.If you are not sure what I mean, begin thinking about your childhood experience with money. How did your parents treat money? Did they respect it? Did they argue about it? Did they gossip about people that had it? Did they imply that it was bad to have? Does money bring up a lot of anxiety for you

For some of you this exercise is going to be life-changing and for those of you that have a healthy perception and respect for money then you are ready for some basic information on how to organize your finances.

Basic Primer to Organizing your Finances

Let’s start by looking at the different categories of Money to determine how to organize it.

We have:

  • Income
  • Expenses
  • Business Expenses
  • Business Income

Income

How do you know what you are making? How does the money get entered into your bank accounts? Do you have many bank accounts? Or just one? Are there several people in your family bringing in income?

Make a list or on the computer, use software like Microsoft Money or Quickbooks to track all of your Checks coming in. I really like banks that have online capacities so you can automatically download the checks that are deposited in your account into your Money Management software.

Check with your financial planner about how many bank accounts you need and for what purpose each account has. I’m not going to advise you on money planning only on organizing your finances.

The overall best way to organizing your finances, in my opinion, is the one that involves the least work. I like to go once a month into my online banking and download all of the statements related to income and checks deposited, and then “synch” it with my money management software.

Expenses

It is important to track your expenses of course and if you are working closely with a budget, you’ll want to first list all of your Fixed Expenses on a piece of paper with the amounts that are absolute, such as your Mortgage, Gas, Education, Phone Payment, Water and Sewer Payments. If you can find ways to lower those, great! Otherwise, know what your Fixed Expenses are and first match those against your budget because if it looks like your fixed expenses are way more than your budget, you are going to need to read the page about Making more Money.

Next are the Other Expenses that you have much more legroom to work with, such as: Food, Clothes, Gym Membership, Travel Expenses, Gifts, Leisure. These are things that during a time of financial difficulty, you really want to streamline. Again, keep a list and estimate how much you need for each of these and then compare it to what you’ve actually been spending. Sometimes it’s a big Ouch!

That’s okay, everyday is a new day! See if you can come up with an average number that a financial planner estimates to be reasonable and then work with it. I’m not great about keeping a daily record of expenses, instead I work on downloading my bank statements more often and then “synching” those with my Microsoft Money Program and then look at the reports of how much I am spending.

That’s what I do, and if you could be more organized about it than I am, I would keep a daily record in a purse, or even hang onto all of your receipts for a week and then list how much was spent on each category of Other Expenses.

Business Expenses

Depending on what type of business you are in, tracking your business expenses can get a little involved, but in general it goes the same for regular household expenses. List your Fixed Expenses and the Expenses you have more room to work with.

The other point I’d like to make is, that b>I think many times, expenses may actually seem fixed when they really are not. For instance, do you really need to spend $20,000 updating your website or could you do it yourself? Do you really need the hottest cell phones for the office, or can you make do with a basic phone?

Of course, you’ve got to pay the overhead and the employees. Though, if you are in a tough economic time in your business, would it make sense to set up an office in your home instead of renting office space and using an assistant or virtual assistants instead of employees?

Again, I’m not a financial planner, just want to make you aware of some of the processes I use, in my own business. If you have more questions about what I do specifically in my day job, please don’t hesitate to contact me.

Business Income

If you are in the business of selling things, I think the best thing, if you are REALLY ORGANIZED, is to keep a daily running list of what was sold and what you paid for it, to whom you sold it, and for how much.

If you can’t seem to think about keeping this running list, I personally keep two boxes. One is receipts for people that paid my cost (wholesale) and one is for people that paid full price or even anyone that paid more than I paid. (profit)

That way, I can go back and calculate my regular paycheck as well as the retail/wholesale side of business. I’d love to hear more about how you track your business income! Please Share!

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