The Value of PIN Debit
Cindy Ballard
Executive Vice President
Communications, Marketing and Administration, PULSE
Judy Lawrence
Financial & Wealth Coach
View Bio
Year-End Checklist
This year Santa Claus isn't the only one who'll be making a list and checking it twice. The end of the year is the best time to take stock on where you stand with your personal finances. Have you been naughty or nice with your spending?
Reviewing the year's expenses will help you set goals for the new year and understand the areas where you can adjust your spending so you can save more. Saving money doesn’t have to be overwhelming. Remember, this is about making a positive change in your life, so start small and set reasonable goals for yourself based on your realistic income and expenditures.
Making Your List
As you start out creating your Year End Checklist of expenses, take into consideration the obvious fixed bills you pay every month like your mortgage or rent, utilities, auto insurance, day care, Internet, cell phone as well as ongoing variable expenses like groceries and gasoline. Also keep in mind those common daily and weekly purchases such as your coffee, meals out, snacks, DVDs, books, movies and other expenses.
Some of the often overlooked expenses to also keep in mind include:
If you’re not sure what expenses are on your list, or how much is actually being spent, the best way to find this out is by reviewing your monthly bank and credit card statements. You’ll find a gold mine of information, as well as a few surprises as you look through each item and start to add them up. Many online banks already offer category summaries of debit card purchases to help you gather this information. If you happen to have an active Home Equity Line of Credit, be sure to review these records for any repeat expenses for the next year.
Pay close attention to those periodic expenses that occur only once or twice a year, or even periodically - expenses like car maintenance, vacations, birthdays, holidays, membership dues. These often overlooked expenses can be the critical missing link when creating a checklist that really works.
Checking It Twice
Now that you have your list laid out, take a hard and honest look at where your money is going. First off, did you live within your means? Did you spend more than you thought on going out? Were gas prices higher than expected this year? Did you really want to spend that much on fast food or expensive coffee? What areas can you cut back so you can start to save more money?
Evaluate what anticipated changes could happen over the new year, such as: job change, relocation, new baby, children starting private school, children going off to college, taking care of parents, or a home remodeling project. You'll want to take a close look at how these changes could impact your budget.
Santa's Watching
Now let’s start fresh for the new year with a month by month approach that’s easy to follow and easy to update. First, look at how much money is coming in each month versus how much is being spent. Double checking your list is integral in determining what you handled successfully last year and what needs to be changed for the next year. If your expenses far outweighed your income, this is the time to make adjustments for the new year.
When outlining your income, use your net income - your take-home paycheck after taxes and other deductions -- since this is the actual amount of money you will be using for paying your bills. Depending on your job situation, you may have ongoing overtime or an additional part time job. If so, include this in your net income figure. Perhaps next year there may be a raise in salary or inheritance coming in. Save this information for a special plan that will outline exactly how you will utilize this windfall, rather than with your normal monthly income and expenses.
The following approach can be a guide for some of the core expenses:
Income
Total Net Income: $
Bonuses, dividends, royalty: $
Expenses
Total housing related expenses: $
(mortgage/rent, insurance, property taxes, home owners association, utilities, cell phone, Internet)
Total transportation related expenses: $
(payments, insurance, maintenance, gasoline, parking-tolls-fast pass, public transportation, car wash)
Total food related expenses: $
(groceries, take out, meals out, lattes, bottled waters, snacks, vending machines)
Total insurance expenses: $
(life, disability, etc. - not already deducted from your paycheck)
Total children related expenses: $
(education, child care, activities, toys)
Total medical related expenses: $
(doctor visits, dental, vision, prescription, supplements)
Total other debt repayment: $
(credit cards, student loans, department stores, personal- not already listed above)
Total other expenses: $
(personal, household, gifts, graduation, pet, recreation, travel and other periodic expenses)
Subtract your total expenses from your total income to know where you stand.
The suggested income and expenses listed above should get you started with the basics. Be sure to go through your list and watch for all the additional expenses not mentioned that apply to your personal household financial situation.
Using debit cards can be a great way to track the total amount you are spending each month. Debit cards provide a record of your transactions almost instantly from the point of purchase, making it easy to see where your money is going. Remember, however, if you are using a debit card versus cash or a check, be sure to regularly review your statement or track your spending daily so that you remain conscious of what you are spending, instead of slipping into autopilot spending.
No Coal in Your Stocking
After calculating the figures, give yourself credit for taking the first step on the road to financial mastery. Taking the time to outline and review this information is not always easy, but a huge step towards greater savings for your future. Planning your budget for next year is all about taking charge of your finances -setting boundaries and guidelines for yourself and gaining control over your spending and having awareness of your spending patterns and attitudes. You might ask yourself as you review your list of last year’s expenses: Was my spending in line with my values, goals and priorities? What changes can I make in the new year to bring me closer to my goal?
You also want to plan for savings. Ideally, 5 to 10 percent of your income is the target amount to save. However, to get started, I encourage people to come up with a reasonable dollar amount. Start small and set a nominal amount per week or per month and make sure that amount stays in the savings. If you put too much aside with great intentions and then end up pulling money back out, because of an ineffectively planned budget, it will erode your confidence in having an ability to save.
Additional confidence booster
The best way to gain confidence and financial control is to stay conscious of all your choices and spending activities. Tracking your daily spending helps you stay more aware of where you stand financially at all times. Also, remember you always have choices. If you are low on funds, remind yourself it’s only temporary. During those times, avoid temptation spots like the mall or favorite websites so you don’t sabotage all your good work. And finally, set aside some "mad money" for those times when you just need a little break, but not so much that it breaks your budget.
Taking some simple steps and making some easy life changes will ensure that saving money is one new year’s resolution that you keep.
