Hi,
When you feel as if you are losing a grip on your expenses, it is time to act in order to reverse the trend before it does damage. Some typical red flags are as follows:
1) You find yourself sending in a little less on your credit cards each month.
2) You stop opening bills when they arrive in the mail.
3) You find yourself transferring money from savings to checking more often than usual.
4) You stop putting money into savings.
5) You start charging items you used to pay for with cash.
6) You stop the maintenance of your monthly budget.
7) You stop talking about finances with your partner.
If any of the above sound familiar to you, it is time to take immediate action to prevent financial chaos. The first thing to do is sit down and reacquaint yourself with your budget and increase the amount of maintenance you've been allotting to it.
By comparing your credit card bills for the last few months with prior months, you should get an indication in what area spending has increased. This analysis should identify whether the spending is acute or chronic, and enable you to make the adjustments to get back on track.
Tomorrow we will talk about red light budgeting for people who are in deep financial trouble.
Until then,
Alan
Showing posts with label budget. Show all posts
Showing posts with label budget. Show all posts
Tuesday, February 13, 2007
Monday, February 12, 2007
Why Everyone Needs a Budget
Hi,
Sound financial management begins with being aware of both income and expenses. Having a good salary is meaningless if we don't know where it goes every month. Everyone has different criteria for how they use money. It's necessary to select a budget model which enhances personal criteria. There are hundreds of models one may use to create a budget. I am going to discuss three budgeting methods I tell people about, since in my experience, most financial situations can utilize one of these models:
1) Green light budget: low maintenance, low energy
2) Yellow light budget: financial situation needs to be brought back into balance.
3) Red light budget: high maintenance, high energy, drastic action needed.
Today I'll outline my concept of green light budgeting, and explain yellow and red light budgets in future blogs.
People who can use green light budgeting are people who are on sound financial footing, and want to ensure that they remain that way. If you want to use this approach, spend a few hours each month recording your expenditures either manually, or using various computer programs. This will keep you aware of any large fluctuations in expenses and allow you to deal with them in a prudent manner. After following this model for a year, you will be able to identify payments which occur quarterly, semi-annually and annually. You will find these figures on your bank statements and credit card statements. The purpose of this low maintenance budget is to essentially track spending in order to maintain financial stability.
Tomorrow I'm going to talk about yellow light budgeting for people who feel as if their financial stability is begining to erode.
Until then,
Alan
Sound financial management begins with being aware of both income and expenses. Having a good salary is meaningless if we don't know where it goes every month. Everyone has different criteria for how they use money. It's necessary to select a budget model which enhances personal criteria. There are hundreds of models one may use to create a budget. I am going to discuss three budgeting methods I tell people about, since in my experience, most financial situations can utilize one of these models:
1) Green light budget: low maintenance, low energy
2) Yellow light budget: financial situation needs to be brought back into balance.
3) Red light budget: high maintenance, high energy, drastic action needed.
Today I'll outline my concept of green light budgeting, and explain yellow and red light budgets in future blogs.
People who can use green light budgeting are people who are on sound financial footing, and want to ensure that they remain that way. If you want to use this approach, spend a few hours each month recording your expenditures either manually, or using various computer programs. This will keep you aware of any large fluctuations in expenses and allow you to deal with them in a prudent manner. After following this model for a year, you will be able to identify payments which occur quarterly, semi-annually and annually. You will find these figures on your bank statements and credit card statements. The purpose of this low maintenance budget is to essentially track spending in order to maintain financial stability.
Tomorrow I'm going to talk about yellow light budgeting for people who feel as if their financial stability is begining to erode.
Until then,
Alan
Subscribe to:
Posts (Atom)
