These Are The Money Questions You Should Be Asking Yourself
Living paycheck to paycheck isn’t fun, but for many people, desperately hoping their earnings last through the end of the month is a sobering reality. Perhaps you fall into this group as well, where you avoid opening letters from your bank, or checking your account balances due to the stress. But life doesn’t have to be this way. Instead of suffering, you can start by taking a more systematic approach to finance, which will help to reduce the anxiety that comes with money management. To get headed in the right direction, start by carefully considering the following questions about your financial situation.
What Annual Budget Works For Me?
While this question is a big one, it doesn’t have to be overwhelming. Start small by setting a date each year for this activity. Ideally, you would start in January, at the beginning of the year, but today is a great day to get started, as well. Next, calculate your typical monthly and yearly expenses to see where your money is going. This provides a good picture of what your money is spent on, and where you could do some cutting back.
What Annual Financial Goals Do I Have?
Jot down the biggest expenses of the year, which could be anything from a college fund payment to your insurance premiums. When budgeting, ensure there’s enough money to pay for these items.
How Much Do I Want To Save This Year?
After you’ve drafted your budget and financial goals, you can look next at how much money is left over. If it’s less than you expected, look for ways to cut back, or ways to earn more on the side. The goal is to have at least a little leftover cash to start saving. Determine a realistic savings goal for yourself each month, and adjust it over time as your situation changes.
What Are The Roadblocks?
Take a moment to reflect on your possible weaknesses with money. Most people have shortcomings in some way when it comes to spending, but it’s all about how you manage them. Perhaps you’re an impulse shopper or splurge too much on large-ticket items. Write down what triggers you to spend money, and work toward being more aware of them in your day-to-day life. Additionally, think of at least one item you tend to spend unnecessary amounts of money on, and try reducing or even stopping your spending on that item.
Am I Being Honest About What I Spend?
It’s surprisingly easy to justify how much we spend, or to convince ourselves how we really need that lavish new thing. However, once you start being honest with yourself, you can achieve a deeper understanding of what you truly can and can’t afford.
Have I Been Saving Enough?
Pay attention to your savings goals by setting money aside every month. Although saving is not as exciting as new purchases, the health of your long-term financials will thank you. Plus, keep in mind that just because you have money in an account doesn’t mean it needs to be spent.
Do I Have Enough For Essentials?
Planning for payments on items like rent, groceries, and insurance is critical to living comfortably. These bills tend to be the same when they come through, so you can plan for them accordingly.
Am I On Track For The Year?
Remember to check your progress toward your larger yearly goals. Letting them go to the wayside could have serious consequences down the line, and it’s easier to do routine checks than it is to clean up a big financial mess in a few months.
What Did I Spend This Week?
Whether you write in a journal or use an app, determine a way to track your spending that works for you. Using this information, you can begin tracking your spending habits, and nip those riskier habits in the bud before they become problematic.
Do I Have Living Expenses Due?
Even if it’s only been a week since you looked at your bills, take a look anyway. You need to make sure you have enough money for your essentials, even if the bill isn’t coming due for a while yet.
Is There Money Left Over?
If so, strongly consider putting that money in your savings. If not, think of what subscriptions or expenses you may be able to cut down on, bundle, or remove completely.
Is Everything Accounted For?
That includes anything you paid for in cash, or even costs as seemingly minor as ATM fees. Remember that small things like auto-renewing subscriptions, or use of the work vending machine all count in your financial journey.
Sure, getting your money under control can feel daunting at first, but don’t give up without trying. When you get used to tracking your money, you can quickly become adept at avoiding frivolous spending and working toward a healthy financial future.