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Managing
finances often revolves around investments, but it
really begins with expenses. People who are successful
in managing their finances are the ones who manage
expenses first. By understanding where the money is
going, and controlling it, better investment planning
and decisions can be accomplished.
Unfortunately,
managing expenses is a lot harder than managing
investments for many people. Just when a budget is under
control comes along an expense that's unavoidable or is
made because of personal urges that can't be controlled.
For those
who need help, there are a number of ways to control the
unpredictable.
One of
them is using a credit card for all purchases. This is
scary for those who lack control as balances can build
up if expenses are poorly managed, but for many it's an
option to consider. By doing this the monthly expenses
can be followed by signing on to the credit card Web
site weekly to monitor balances. When the budgeted
amount of expenses creeps near, say a budget allows
$3,000
a month in expenses, then when the balance is around
$2,500
it's time to slow down expenses until the next billing
cycle.
When the
credit card bill arrives, pay it in full. There will be
enough money in the bank to pay it off because a
paycheck or deposits for the month should be more than
the expense budget.
A bonus
of this method is using a card that pays rewards.
Getting cash back or discounts allows for more expenses
or savings.
For the
tech savvy, another method is to use Mint.com. This free
Web site lets you enter your budget and tracks it
automatically by linking to checking accounts and credit
cards. It watches these accounts and attempts to
classify what category the expense falls in, then charts
it and even will send an email when a budget category
has gone over.
Mint.com
also provides a running balance of assets, including
real estate. Some may choose to manage expenses
according to assets. They may set a goal of assets
increasing
$2,000
a month, whether through investment returns or lower
expenses, and make spending adjustments accordingly.
In the
end, it's all about increasing assets every month in
order to build a secure pool of money for retirement.
And the only way to do this is by keeping expenses lower
than income in order to have money left over to invest.
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