Getting a Handle on Finances
For most of us, financial pressures are a constant; there always seems to be another bill to pay. How many times have you woken up with that knot in your stomach, worrying about how you would be able to cover rent or buy groceries? You’re not alone!
The fact is, there are no easy answers, but there is hope. Regardless of how we got here - past decisions, mistakes, unexpected emergencies, or crazy bad luck - we need to look forward. We need a plan. And often that plan starts with a simple, clear understanding: what money is coming in and what money is going out.
To start, grab a pen and some paper (or if you are a bit nerdier, grab a spreadsheet!) Start with money coming in each month. How much money do you make from your job? How much do you receive in alimony or child support? How much do you receive from others or from government support? Write it all down, then add it up.
For most of us, that part is pretty easy. The hard part is figuring out how much we typically spend! Start with the big things: rent or mortgage, car, and the big bills (maybe insurance, phone, utilities, credit card payment, etc). Then start estimating the other things. How much do you you spend on food and gas? What about those little indulgences to keep our sanity? There are probably a few other things that make the list as well; add them to the list and total it up.
When you subtract your expenses from your income, hopefully there is still something left. If you don’t like the answer - and few of us do - what are some things to do about it?
Let’s start with the income side.
Your job income - are you being paid fairly for your education and experience? This often takes some humility because it’s easy to slam our fist down and declare that we are way underpaid and undervalued! If we truly are, we can humbly ask for a raise or think about a job change (note: this is a longer term move and one that should be done with great care and caution).
Other income - are you receiving the court determined, or mutually agreed to, levels of support? If not, there are options, but typically they are slow and difficult. We plan to have a blog post soon on navigating this, but in the meantime, document everything! Is there a “side-hustle” that you could make work for your schedule and particular situation?
Now that we’ve done our best on the income side, let’s look at our expenses. Now that we know where our money is going, how can we cut back?
Credit card debt - for many of us, credit cards are a major source of pain. It is crucial to try and get this reigned in! For some great advice on how to make progress, check out Dave Ramsey’s free tools. Particularly helpful is the idea of a “debt snowball,” which you can find here.
What about subscriptions that are rarely used or aren’t needed? For example, many people don’t use their cable tv subscription or their unlimited data on a phone plan as much as they might need - and there are ways to get free tv shows and WiFi in other ways. What about music and streaming services, workout apps, or other subscriptions that you might not be getting the value out of?
Utilities - Last year, I felt convicted about the amount of electric, gas, and water our family was using and so we set a goal of reducing them each by 10%. By hanging clothes outside (sometimes), turning off the electric dry on the dishwasher and being more mindful about lights, we cut our electric by 22%. By fixing a leaking toilet, getting a rain barrel, and be mindful on water, we reduced that by 45%, and simply managing the temperature of the house and better leveraging the sun’s heat in the winter, we reduced our gas by 12%. That adds up to some significant savings!
Gas - While easier for some than others, simply being intentional about our driving habits can significantly impact how much we pay for gas each month. Do you combine errands when you are out to reduce the number of trips? Do you have the opportunity to walk to local stores? Do you have a fuel efficient car?
Believe it or not, simply knowing and having a handle on this information is incredibly valuable and can have a huge impact! If you’d done this exercise and would like more help, if you have a support team, reach out to them as the odds are someone on that team geeks out of this stuff and would love to help. If not, let us know what additional questions you might have!
Helpful tools:
Mint – This is a great free budgeting tool that connects to your bank account, it lets you set a monthly plan and then track progress against that plan.
Dave Ramsey – He has developed so many great tools to teach financial stewardship!
